source: Spotify Technology S.A. annual financial filings submitted May 7th with the Luxembourg Registre de Commerce et de Sociétés.
Don’t Worry, Spotify Only Lost $181.5 Million Last Year…
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There is no streaming service out there that makes money.
Most streaming services can’t get anyone to pay for music.
Artist want more money from streaming services.
Consumers love streaming.
Somethings got to give……..
Insanity. A fatally flawed business model creating a total meltdown of earnings for musicians and songwriters. Apple Beats are you getting this? Don’t just save making music as a paying career, but how to make money yourselves.
Could this earnings (?) report been an driver for closing their last round of funding?
Last year’s loss was double the previous years loss however their licensing costs certainly didn’t double.
Where did all that other money go?
They are spending a lot of money because they entering new international markets like Canada and Japan. It is expensive to do this but they expect a return on investment.
Now, I’m public Spotify enemy #1 — but Ek’s new plans to include VIDEO may change everything!
And that’s what we should be discussing here, imo…
Was wondering if you saw that…haha.
Hehe…
—————————————
🙂 The real Anonymous 🙂
VIDEO!!!?
Just take a look at VEVO.
Totally screwed up with much worse books than Spotify, music incinerator!
Both entities established courtesy creativity of UMG boys!
MR. GRANGE,
It is also your team Trojan horsing Apple to MR. EK’S suicide mode.
Wake up or you will PERMANENTLY shrink $100B of OBVIOUS TO AN IDIOT music goodwill to $20B of subs and ads in 2025. IF YOU ARE LUCKY!
Everyone is getting into video, I think – it is the cool thing to do, after all.
What makes you optimistic about Ek’s new plans to include video? Just curious.
I wonder. Will they allow subscribers to upload videos and play the Safe Harbor card?
It is become more and more apparent that Spotify will have to look at alternative business offerings to be profitable.
“Will they allow subscribers to upload videos”
I certainly hope so — that’s what makes YouTube so popular!
Fans love to participate, to be creative.
But Safe Harbor is a 20th century concept that won’t survive much longer. And ContentID simply failed (most artists can’t use aggregators to claim their music because they use cleared, but non-exclusive samples from keyboards and commercial sample libraries).
So it’s necessary to find a new way to deal with piracy and monetization.
I’ve suggested such a way:
Tell users they’re allowed to create all the mashups and parodies they want — on two conditions:
1) User generated content can never be monetized by the user.
2) User generated content can only appear next to the original song — as a direct video comment!
And I mean direct in the sense that it’s linked intimately to the video from which it is taken. There will be no questions about origin, copyright, ownership. There’ll be no arguments, nothing to discuss.
Only registered content providers can monetize content.
That’s the dumbest idea I’ve ever heard! Seriously, read what you wrote there. All kindsa stupid!
Why don’t you tell us why it’s stupid, Larry?
Point by point, please.
You’re talking about Fare Use, which is an entirely different nightmare. We have a law that has failed creators miserably. It’s called take down.
“You’re talking about Fare Use”
No, this has nothing to do with fair use.
I’m proposing a system where the content owner decides if a user generated version is acceptable or not.
Fair use blows a hole in that idea. If something is considered fair use, then they can monetize their content. Doesn’t matter what the original copyright holder thinks. The law decides what a individual can do. Not the copyright holder.
“The law decides what a individual can do”
No, no, no — you make your own rules for your own streaming site.
Sarah or Ek can decide that there’s no such thing as Fair Use on their sites.
It’s entirely up to them.
Well, fair use isn’t the problem. If it’s fair use, then it’s fine. I think fair use is morally as well as legally right.
The problem is that most of the stuff getting uploaded to sites by users isn’t fair use – it’s infringement, plain and simple, and the service allows it to be uploaded then hides behind the Safe Harbor.
So we’re cool with fair use – we just have very strict standards for what constitutes fair use (if it’s not obvious fair use, we side with the copyright holder), and a strict violation policy. This may change, but the way we’ve designed our system and policies means that we don’t need to use the Safe Harbor. We’re serious about preventing infringement and don’t see the need to categorically dodge responsibility for making sure our site isn’t a place for theft.
As for those infringing users: they’re going to put their infringing videos up somewhere. Don’t allow it on one site, they’ll find a different site. That’s why we do intend to eventually allow UGC – but in a very specific, controlled way that satisfies their desire to upload crap while enabling the owner to easily track, control, and profit from that content.
“If it’s fair use, then it’s fine.”
…which is where the you-know-who step in. 🙂
“we do intend to eventually allow UGC – but in a very specific, controlled way that satisfies their desire to upload crap while enabling the owner to easily track, control, and profit from that content.”
Sounds brilliant.
…oops, sorry about the italics-mess…
oops, didn’t see this before I wrote the other comment below.
Your proposed conditions for UGC are similar to what we’re going to do. It’s a bit more complicated, but that’s the gist of it. Particularly the points about giving the owner control, linking to original content, giving owner exclusive rights to monetize.
“What makes you optimistic about Ek’s new plans to include video?”
Spotify may not survive because of video, but it would die without it. See what happened to silent films.
Spotify raised another $400 million (total value $8 billion) to build an improved YouTube?
Fine, so in the coming years when a new tech “cool thing to do” comes around Spotify will ask for another half billion to change/enter into that business model/market?
If only Spotify could sell their product as well as they sell the idea of their product.
MTV , pure VIDEO, was cool in 1982 and is dead now!
Just allow folks to live their lives and enjoy the best music you can feed to them on the Radio, on TV, on streaming service or at the ELEVATOR!
JUST COLLECT TOLL WHEN THEY LIKE IT AND WANT TO LIVE IT AGAIN!
I call it DISCOVERY MOMENT MONETIZATION. It is overdue to convert Radio, TV or STREAMING to discovery based $100B music store. We got ALL RESOURCES to do it by 2020. Google can double own revenues if it decides to become MASTER EXECUTOR of new music industry!
Let’s do it Mr. Page! It is also overdue to change you email sorting human. This is the best MOONSHOT you have been looking for!
Well, they took more in on revenue than they spent on licensing/royalties. So how did that huge loss come about?
They are a modern tech company, which means they have to waste boatloads of money to attract top tier programmers. The cost of keeping their offices running, beyond just rent, is probably staggering.
Judging by how buggy the software player has become I would say they have not been successful in attracting top tier programmers. Not to mention the increasing number of features being removed.
Maybe not, entirely possible. But based on some photos I’ve seen from someone I know who works there, they are certainly wasting tons of money making their hip office spaces.
Their losses probably have more to do with marketing costs in acquiring subscribers, free or paid, to win the battle of being the biggest and best in the space. The strategy being to drive the wannabes out of business, at which point Spotify won’t have to spend so much on customer acquisition. Once you pick a digital streamer, you don’t need another one..
Maybe they promote heavily elsewhere and I’ve just not seen it, but based on my experience, I doubt it’s marketing simply because they’ve been awful at that since the beginning. They had their invite-only launch which was effective to a degree, and I’ve only seen one ad campaign since then, and I’m pretty sure I only saw those ads in movie theaters. Maybe on sites like Hulu, I forget, but I remember seeing commercials in that 20 minute lead up to previews.
I think Taylor Swift talking about them was the most effective marketing they’ve ever had…
Agreed on the T. Swift point…
as for not noticing their marketing efforts, im sure it’s because you’re entrenched in the music world and wouldn’t come across their ads very often..spotify doesn’t need to market to readers on DMN and the like, everyone here knows what they are…there are still plenty of people who’ve never heard of Spotify, and that’s who they’re going after…im not sure what % of the population still isn’t signed up with a digital streamer, but i bet it’s pretty large….it’s a big world out there..
Certainly a possibility but I feel like I’d see it somewhere. Now that I think about it more, I think they ran ads on the subway here (NYC) for a couple months, maybe about a year or so ago.
But when I talk marketing, for a company of that size, and quite frankly, having a bit of trouble bringing in users, not to mention in an industry that’s about to get a couple other big names jumping into the ring, I’d expect marketing on the level of say, Beats. Celeb endorsements, commercials that get you amped up, sponsored shows, or something. Throwing up ads on the subway is the same level of promotion as local dermatologists. Doesn’t count.
When Amazon, Apple, and Google are entering that space, Spotify’s strategy guarantees failure. They are small fry compared with those three. They can only dream of having Amazon’s money, and Google and Apple are on a completely different level still.
Keep in mind that licensing is only one of the costs that goes in to their margin ALONE! Next are streaming and infrastructure costs (not shown here), people (payroll + undoubtedly wonderful benefits), outside contractors (payment processors, gateways, etc).
OK I got it.
So these infrastructure costs will decrease as Spotify grows larger?
Theoretically, yes, they should – if they manage costs well.
Maybe not decrease, but they could level out at some point. I don’t know too much about coding and website/app upkeep and shit, but I imagine there’s a point where things get streamlined or growth doesn’t mean you need to keep hiring. But I could be wrong. Also, if they are going to implement video I’m sure they’ll be expanding in the immediate future.
Even bandwidth costs go down with volume.
They have offices and salaries that pretend they’re already profitable.
There’s a simple business procedure to make money and that’s “Supply & Demand” so now, there’s way too much supply and no demand. No business can stay afloat like that. Quite frankly, I’d like to see them all lose their shirts and all of the professional musicians attached to a record label, remove their links from social media altogether. Maybe a demand might find it’s way home. It’s nice to dream.
That figure is creative counting. It sounds like allot, but I bet those figures are after paying their executives the trumped up salaries. The music biz is zero fun now.
Ek admits Spotify is not profitable.
http://www.quora.com/Is-it-possible-for-users-to-listen-so-much-that-it-costs-Spotify-money/answer/Daniel-Ek?srid=trP4&share=1
Can you imagine how much they would lose if they paid more to artists? Even raising it by a fraction of a penny will put them even further in the red. So, I think that the main point of streaming is scalability, because I don’t see any of them being at all scalable.
Paying 15% more would double their losses.
If that’s true, than that sure is a high loss-to-gain ratio. Would it be safe to assume that would prove that it is truly unsustainable at that point?
So they’ve lost about $500m to date. But they’ve raised close to $1B as of latest funding. So anyone who thinks they’re on the verge of shutting down will be disappointed. Lots of money still in the bank.
As a musician trying to release music, I wish this website would spend as much time showcasing solutions as well as showcasing problems and ripoffs. We need distribution reviews like last year’s Ari overview every month, not every year.
Still hasn’t lost as much as D.E.N. did. Give it time.
What is “total financing” ? This is not clear at all. You’re egging on people to make assumptions without clarity. Everyone wants to know if this model is working. I’d say by the looks of it, it certainly is, and will soon amount to Spotify figuring out how to pay artists/royalties more.
Losses? Revenue? From what?
What is “total financing” ? This is not clear at all. You’re egging on people to make assumptions without clarity. Everyone wants to know if this model is working. I’d say by the looks of it, it certainly is, and will soon amount to Spotify figuring out how to pay artists/royalties more.
Losses? Revenue? From what?