Tough times for the world’s leading music streaming service, Spotify, which in the last quarter, it saw its losses soar to 270 million dollarswhich represents an increase of 700%.
The streaming music business is complicated, not to say ruinous. If we take this into account up to 70% of revenue goes to record companies, we are left with 30% for services, which must pay all costs with this small pinch. Jimmy Iovine, founder of Beats, said it already when it was acquired by Apple: “Streaming services are in a very unfavorable situation because there are no margins, they do not bring in money. Amazon has Prime, Apple sells phones (among many other things), but Spotify is going to have to find a way to get its users to buy something else.”
For companies like Apple, Amazon or Google is not a big deal because your business is not there. Apple offers Apple Music alongside many other services and as a purchase title for 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, a complement to maintain their loyalty to their products and not switch to another brand. Spotify is all about that, and its experimentation 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 the subscribers keep growing and yet the losses increase even more. Active users increased by 20%, to 480 million, and paying users by 14%, to 205 million. These very positive numbers come to nothing when the streaming giant’s accounts are reviewed. Part of the problem lies in the offers offered by Spotify 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.
