this post was submitted on 03 Jun 2024
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The problem is that Spotify is losing money each year. They aren't profitable. And if they are keep focusing on music, they never will. Their deal with the music labels says that they need to give 70 % of each subscription to the music labels. So by getting more people to signup, they only marginally increase their revenue. Same goes for raising their prices.
Thats why they tried focusing on Podcasts and Audiobooks. Those are a lot more profitable, either by adding ads (Podcasts) or by charging a premium (audiobooks).
It's amazing to think how incompetent their management must be that they're charging more, delivering lower audio quality, and paying less to artists than competitors like Tidal, yet still aren't profitable.
They pay less than Tidal claims it pays. So far Tidal has a really bad history of publishing correct numbers.
There is an episode of Tech Won't Save Us (2024-01-25) discussing how weird the podcasting play was for Spotify. There is essentially no way to monetize podcasts at scale, primarily because podcasts do not have the same degree of platform look-in as other media types.
Spotify spent the $100 million (or whatever the number was) to get Rogan exclusive, but for essentially every other podcast you can find a free RSS feed with skippable ads. Also their podcast player just outright sucks :/
Hang on. 70% of the subscription before any royalty / streaming costs?
So in a $10 payment, $7 is immediately removed, then another say $1 for streaming costs leaving only $2 for profits which Spotify takes 30%?
From each $10 only $1.40 goes to artists?
From the 10 Dollar, taxes will be deducted. Afterwards Apple or Google take their share (if you subscribe using the App). Of the remaining money the Music labels take 70 %, and Spotify keeps 30 %. The music labels pay a fraction of the 70 % to the artists, depending on the contract and the artist's share of streams reported by Spotify.
Interesting. I wasn’t aware that they weren’t profitable.
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