6 ms·

I'm a heavy user of spotify. Almost everyone I know uses it daily. I don't understand why they are not able to turn this much engagement into profit.

gumballindie 3y ago
> Almost everyone I know uses it daily. Counterpoint: almost no one I know uses it. It was fun at first but became boring fast, a bit like Netflix. If I want to listen to music I use youtube.
- altdataseller 3y ago
  Same, most people I know use Apple Music while others use YouTube Premium
  - emmet 3y ago
    I am one of the 8 people in the UK that use Apple Music. Literally everyone uses Spotify outside of America.
    - gumballindie 3y ago
      Paerhaps in your circle of friends. But spotify is not that popular. I wouldn't be surprised if their numbers of users are doctored. I know travel sites count the number of devices used by the same user as distinct users. One reached a number higher than the actual world population, people starting asking questions, and then they clarified it. It helps with marketing when you create the impression that "everyone uses it". For instance Threads has more users than OpenAI's chat bots but people think there are more users of the latter due to marketing. Spotify claims to have 226 million subscribers - as many as there are yahoo users. Yet I guarantee you that Yahoo is not popular. And neither is Spotify.
      - emmet 3y ago
        The penetration rate is pretty obvious when you look at social media at this time of year. Everyone has posts of their Spotify Wrapped. 226 million doesn't seem that high when it's the only music streaming service that most people in Europe are even aware of.
        gumballindie 3y ago
        > that most people in Europe are even aware of Care to link to evidence? > Everyone has posts of their Spotify Wrapped. Did someone check with _everyone_? It feels like when people make such statments they refer to their own bubble. "It is known" is not a valid argument.
      - occz 3y ago
        226 million paying subscribers versus free Yahoo users is maybe the biggest apples-to-oranges I've heard in my life.
- pavlov 3y ago
  This is like the HN trope of “nobody uses Facebook / Instagram / [other social media product] anyway.” These services are global with hundreds of millions of users or more. There’s nothing useful to be extrapolated from the usage patterns of yourself and a handful of friends. (Personally I only listen to Amiga MODs and watch 8mm home movies of my mother while whistling the theme from “Psycho”.)
  - FirmwareBurner 3y ago
    And here I am with my "definitely legit" collection of MP3s I keep on my phone and PC, played on Winamp 2.95.
- josefresco 3y ago
  Counter-Counterpoint: I got two teens in (American public) high school - they claim "everyone" uses Spotify and grumble about our YouTube Music/Premium subscription. ¯\_(ツ)_/¯
Kbelicius 3y ago
> I don't understand why they are not able to turn this much engagement into profit. Because any growth in profits that spotify sees will quickly be eaten by music rights holders.
glimshe 3y ago
They are likely not charging enough for their costs. A lot of unsustainable businesses are like that. Users love it because of the low prices and high perceived value - think Uber.
- oblio 3y ago
  Anyone remember Grooveshark? Great service :-D
  - thomastjeffery 3y ago
    Spotify basically started as a P2P Grooveshark that promised to pay royalties. Now they are a CDN that pays royalties. The problem is that they refuse to accept the reality that there is an end to growth.
    - nemo44x 3y ago
      They have opportunities to leverage their massive footprint by vertically integrating. They could begin to acquire talent and exclusively release their music and prioritize it in their algorithms or forge agreements with existing labels that create this sort of arrangement. They would then have leverage to negotiate better deals with 3rd party rights holders. In essence a type of payola since they have a lot of sway in picking winners and losers. They sort of tried this with podcasts but I’m not sure those move needles like music can. So yeah their current model may be limited but they have a lot to work with.
      - thomastjeffery 3y ago
        They are certainly doing that. But that is only a solution to the select few who are chosen to be vertically integrated with! They have also vertically integrated in the opposite direction: by making deals with large media corporations, and also by implementing DRM (to appease those media corporations). So at this point, there isn't much vertical integration left to be had. Any more deals with individual artists (or labels) would really just be horizontal integration. > So yeah their current model may be limited but they have a lot to work with. That limit is practically the entire worldwide music industry. They are very close to that limit, and seem utterly ignorant about it.
capableweb 3y ago
Spotify is a public for-profit company with shareholders, the purpose of their organization is not to make profit so they can redistribute it, but to increase the share value as much as possible in order for the shareholders to benefit. Sometimes that means that they need to increase profits, but not always, there are other ways to increase the share value besides profits.
- lotsofpulp 3y ago
  Such as?
  - azemetre 3y ago
    Reducing operation costs (labor), selling valuable assets are two that immediately come to mind.
    - lotsofpulp 3y ago
      Both of those result in increasing profits.
      - azemetre 3y ago
        My bad, I misread what the person you were replying to asked.
  - capableweb 3y ago
    "Hype" is a common way for "modern" companies to drive up share price, see TSLA for a good example of that. Greenwashing is another, not as common approach.
    - lotsofpulp 3y ago
      Look at Tesla’s net income: https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-income https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc... That is not hype, that is cash.
infecto 3y ago
I am a cynic here but part of me feels that with such low interest rates for so long, a lot of companies in tech could ignore profitability so long as they were hitting that MAU and related targets.
realusername 3y ago
> I don't understand why they are not able to turn this much engagement into profit. They will never be able to, regardless of how much they pricing the platform, the music majors will renegotiate and ask all of their profits.
bazmattaz 3y ago
A huge amount of revenue goes into paying royalties

gumballindie 3y ago

> Almost everyone I know uses it daily. Counterpoint: almost no one I know uses it. It was fun at first but became boring fast, a bit like Netflix. If I want to listen to music I use youtube.

altdataseller 3y ago
Same, most people I know use Apple Music while others use YouTube Premium
- emmet 3y ago
  I am one of the 8 people in the UK that use Apple Music. Literally everyone uses Spotify outside of America.
  - gumballindie 3y ago
    Paerhaps in your circle of friends. But spotify is not that popular. I wouldn't be surprised if their numbers of users are doctored. I know travel sites count the number of devices used by the same user as distinct users. One reached a number higher than the actual world population, people starting asking questions, and then they clarified it. It helps with marketing when you create the impression that "everyone uses it". For instance Threads has more users than OpenAI's chat bots but people think there are more users of the latter due to marketing. Spotify claims to have 226 million subscribers - as many as there are yahoo users. Yet I guarantee you that Yahoo is not popular. And neither is Spotify.
    - emmet 3y ago
      The penetration rate is pretty obvious when you look at social media at this time of year. Everyone has posts of their Spotify Wrapped. 226 million doesn't seem that high when it's the only music streaming service that most people in Europe are even aware of.
      - gumballindie 3y ago
        > that most people in Europe are even aware of Care to link to evidence? > Everyone has posts of their Spotify Wrapped. Did someone check with _everyone_? It feels like when people make such statments they refer to their own bubble. "It is known" is not a valid argument.
    - occz 3y ago
      226 million paying subscribers versus free Yahoo users is maybe the biggest apples-to-oranges I've heard in my life.
pavlov 3y ago
This is like the HN trope of “nobody uses Facebook / Instagram / [other social media product] anyway.” These services are global with hundreds of millions of users or more. There’s nothing useful to be extrapolated from the usage patterns of yourself and a handful of friends. (Personally I only listen to Amiga MODs and watch 8mm home movies of my mother while whistling the theme from “Psycho”.)
- FirmwareBurner 3y ago
  And here I am with my "definitely legit" collection of MP3s I keep on my phone and PC, played on Winamp 2.95.
josefresco 3y ago
Counter-Counterpoint: I got two teens in (American public) high school - they claim "everyone" uses Spotify and grumble about our YouTube Music/Premium subscription. ¯\_(ツ)_/¯

Kbelicius 3y ago

> I don't understand why they are not able to turn this much engagement into profit. Because any growth in profits that spotify sees will quickly be eaten by music rights holders.

glimshe 3y ago

They are likely not charging enough for their costs. A lot of unsustainable businesses are like that. Users love it because of the low prices and high perceived value - think Uber.

oblio 3y ago
Anyone remember Grooveshark? Great service :-D
- thomastjeffery 3y ago
  Spotify basically started as a P2P Grooveshark that promised to pay royalties. Now they are a CDN that pays royalties. The problem is that they refuse to accept the reality that there is an end to growth.
  - nemo44x 3y ago
    They have opportunities to leverage their massive footprint by vertically integrating. They could begin to acquire talent and exclusively release their music and prioritize it in their algorithms or forge agreements with existing labels that create this sort of arrangement. They would then have leverage to negotiate better deals with 3rd party rights holders. In essence a type of payola since they have a lot of sway in picking winners and losers. They sort of tried this with podcasts but I’m not sure those move needles like music can. So yeah their current model may be limited but they have a lot to work with.
    - thomastjeffery 3y ago
      They are certainly doing that. But that is only a solution to the select few who are chosen to be vertically integrated with! They have also vertically integrated in the opposite direction: by making deals with large media corporations, and also by implementing DRM (to appease those media corporations). So at this point, there isn't much vertical integration left to be had. Any more deals with individual artists (or labels) would really just be horizontal integration. > So yeah their current model may be limited but they have a lot to work with. That limit is practically the entire worldwide music industry. They are very close to that limit, and seem utterly ignorant about it.

capableweb 3y ago

Spotify is a public for-profit company with shareholders, the purpose of their organization is not to make profit so they can redistribute it, but to increase the share value as much as possible in order for the shareholders to benefit. Sometimes that means that they need to increase profits, but not always, there are other ways to increase the share value besides profits.

lotsofpulp 3y ago
Such as?
- azemetre 3y ago
  Reducing operation costs (labor), selling valuable assets are two that immediately come to mind.
  - lotsofpulp 3y ago
    Both of those result in increasing profits.
    - azemetre 3y ago
      My bad, I misread what the person you were replying to asked.
- capableweb 3y ago
  "Hype" is a common way for "modern" companies to drive up share price, see TSLA for a good example of that. Greenwashing is another, not as common approach.
  - lotsofpulp 3y ago
    Look at Tesla’s net income: https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-income https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc... That is not hype, that is cash.

infecto 3y ago

I am a cynic here but part of me feels that with such low interest rates for so long, a lot of companies in tech could ignore profitability so long as they were hitting that MAU and related targets.

realusername 3y ago

> I don't understand why they are not able to turn this much engagement into profit. They will never be able to, regardless of how much they pricing the platform, the music majors will renegotiate and ask all of their profits.

bazmattaz 3y ago

A huge amount of revenue goes into paying royalties