

Spotify loss widens despite higher revenue - kerryiob
http://mediadecoder.blogs.nytimes.com/2011/10/10/spotify-loss-widens-despite-higher-revenue/?src=busln

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nixy
Spotify is a really bad deal from an investment point of view. For each dollar
they stand to make profit, the record companies will up their license fees a
dollar. Thus, there's no room for profit in companies like Spotify.

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dmk23
That is exactly their problem. Spotify owns neither the customer nor digital
contents.

They can play their "music discovery arbitrage" game till it grows big enough
that their partners have enough incentive to step in and take over their
business.

No different than what happened to Facebook app makers. Even Zynga's profit
outlook is questionable as it is crystal clear from their latest filing...

Spotify's best bet is to sell themselves at the peak. But they are pretty
expensive already.

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Happer
I don't think Spotify can easily sell themselves. It would immediately void
all their current licensing agreements.

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orclev
How can a company have income like that and still be that far in the hole?
Where are the costs coming from? Obviously bandwidth is going to cost, but I
can't imagine it takes that big a hunk of their profits. Obviously the top
expense is going to be licensing which tells me the studios are really the
ones killing Spotify. Does anyone else find it odd that the ones who determine
how much of a profit or loss the company incurs are also the ones watching the
business to see how well it does? Is this a case of the left hand having no
clue what the right hand is doing, or are the studios intentionally trying to
kill Spotify to make some kind of point? Maybe they're trying to make it seem
like a streaming service can't succeed because of "rampant piracy", and use
that as an excuse to get new legislation? Maybe the goal is something else
entirely. All I know is I'd really like to see a breakdown of their monthly
expenses.

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ethank
Likely it's minimums to rights holders.

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ltamake
Spotify will never be truly profitable. The labels are leeching whatever
profit they make out of pure greed. It's a huge problem for any big streaming
service, and it's just not worth it for investors.

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kerryiob
As far as I understand it, each music subscription service negotiates it's own
rates with the labels. There isn't an industry standard fee. So unless the
fees have been publicly disclosed, it's a guess.

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gunz_rozez
Another free (at-least so far) music streaming service that has figured out
how to make money.....build out the eye balls(in this case ear lobes) and
money will follow strategy?

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zmanji
I can only wonder how much of the costs are fees to the music companies. Is
there any way to figure out at all what Spotify , Rdio, etc have to pay to
provide their selection?

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dfischer
I think it's 3 cents per a stream. 33 songs for a dollar. 330 for 10 dollars.
Let's say 11 hours of music for $10 a month?

I think they're losing money on how many songs people listen to vs
subscription cost. The advertisement isn't offsetting it.

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evertonfuller
You must be joking. Spotify paid out 0.003 per play on my last royalty
statement. Pathetic. The sooner Spotify goes under, the better for the music
industry.

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icebraining
What makes you think you'd have made more money if Spotify didn't exist?

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chrischen
You would buy the CD, or pay for the download. Doing that is way less
justifiable when it's available on Spotify.

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icebraining
Do you seriously think people would buy the CDs of all the music they listen
to in Spotify if it went offline? And go from spending $10/month to hundreds?

That kind of assumptions is what leads the RIAA to calculate losses bigger
than the entire world's GDP.

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chrischen
No, but people might do it for the handful of artists they _really_ like or
_believe_ in.

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nhangen
This will change as more and more artists go label free. The labels are
clearly making a stand here - against the artist.

