Tough times for the world’s leading music streaming service, Spotify, which in the last quarter he has seen his losses skyrocket to 270 million euroswhich represents an increase of 700%.
The streaming music business is complicated, not to say ruinous. If we take into account that up to 70% of revenue goes to record labels, we are left with 30% for services, which must pay all costs with that small pinch. Jimmy Iovine, founder of Beats, already said it when it was acquired by Apple: «Streaming services are in a very unfavorable situation because there are no margins, they don’t make any money. Amazon has Prime, Apple sells phones (among many other things), but Spotify is going to have to figure out a way to get their users to buy something else.”
For companies like Apple, Amazon or Google is not a big problem because your business is not here. Apple offers Apple Music as an addition to a large number of other services and as a claim to purchase its products. He makes a lot of money with all the iPhones, iPads and Macs he sells, and with many other services he offers. Having Apple Music is a claim for its users, an addition to maintain their loyalty to their products and not switch to another brand. Spotify is dedicated solely to this, and its experiments with podcasts and with products like the Spotify Car Thing, a resounding failure that stopped selling a few months ago.
And worst of all, it is difficult to think of a solution to this problem, because subscribers do not stop growing and yet the losses grow even more. Active users increased by 20%, to 480 million, and paying users by 14%, to 205 million. These very positive figures come to nothing when the streaming giant’s accounts are reviewed. Part of the problem is in the offers that Spotify offers to attract new paying customerssuch as student accounts, the extremely low prices it offers in some countries, and promotions that offer the service at ridiculous prices for a few months.