3 ms·

Spotify is not exactly a shining beacon on the hill for a successful company. They aren’t profitable and they are total beholden to the record labels. They ar

Spotify is not exactly a shining beacon on the hill for a successful company. They aren’t profitable and they are total beholden to the record labels. They are forced to give 70% of their revenue to record labels. Their fixed cost go up in lockstep with their revenue - not exactly the model of a successful tech company. Netflix paid a fixed amount to license content and then could spread that cost as it gained customers. It’s the same with their own content. They never have to pay the content producers again for the content they fund.

kmeisthax 4y ago
...until Netflix's licensing agreements expire, which they do regularly. Then the networks demand twice as much money and they have to either keep growing to outpace the cost of licensing or jack up subscription fees, or both.
- scarface74 4y ago
  Or they “become HBO before HBO becomes them”. That was the entire reason for them doing their own content.
dopeboy 4y ago
I would argue they are in a much more stable position vs Netflix. They are the one stop shop for every kind of audio. Retention will be the true barometer here.
- scarface74 4y ago
  How is a company that is not profitable and will never make more than a 30% gross margin on a customer in a more stable position? They are also suffering from the “DropBox problem”. Streaming music is not a product. It’s a feature. Their largest competitors don’t have to make money on streaming music. Streaming music for Apple and Amazon are just features to sell hardware.
  - dopeboy 4y ago
    Is this were the case, why is Amazon's and Apple's pricing the same as Spotify's?
    - scarface74 4y ago
      Spotify isn’t profitable. Apple and Amazon don’t need for their streaming products to be profitable as stand a line services. Just like Microsoft doesn’t need for OneDrive to be profitable by itself - hence the “Dropbox problem”. https://www.inc.com/will-yakowicz/why-dropbox-founders-said-no-steve-jobs.html https://www.inc.com/will-yakowicz/why-dropbox-founders-said-... Do you think AppleTV+ is profitable as $7.99 stand alone service?

kmeisthax 4y ago

...until Netflix's licensing agreements expire, which they do regularly. Then the networks demand twice as much money and they have to either keep growing to outpace the cost of licensing or jack up subscription fees, or both.

scarface74 4y ago
Or they “become HBO before HBO becomes them”. That was the entire reason for them doing their own content.

dopeboy 4y ago

I would argue they are in a much more stable position vs Netflix. They are the one stop shop for every kind of audio. Retention will be the true barometer here.

scarface74 4y ago
How is a company that is not profitable and will never make more than a 30% gross margin on a customer in a more stable position? They are also suffering from the “DropBox problem”. Streaming music is not a product. It’s a feature. Their largest competitors don’t have to make money on streaming music. Streaming music for Apple and Amazon are just features to sell hardware.
- dopeboy 4y ago
  Is this were the case, why is Amazon's and Apple's pricing the same as Spotify's?
  - scarface74 4y ago
    Spotify isn’t profitable. Apple and Amazon don’t need for their streaming products to be profitable as stand a line services. Just like Microsoft doesn’t need for OneDrive to be profitable by itself - hence the “Dropbox problem”. https://www.inc.com/will-yakowicz/why-dropbox-founders-said-no-steve-jobs.html https://www.inc.com/will-yakowicz/why-dropbox-founders-said-... Do you think AppleTV+ is profitable as $7.99 stand alone service?