Spotify is doing something right to have so many people signing onto its service.
Yeah, it’s losing money. The ONLY reason it SEEMS successful is its cheaptard parasites. Nothing is free and Spotify will die the death of a thousand cuts. Spotify is not Google or Amazon you know.
I also still question the revenue they get from those "premium" subscriptions. I constantly see promotions where you get 6 months or 1 year of free Spotify Premium if you buy "insert product here".
I'm getting Apple Music for two years as part of my cell plan. It's no more expensive than my last contract so someone's eating the cost somewhere.
Ive also still got Spotify for the reason noted above. It's just easier to use.
But I don't know how much vc money can continue to be tipped into this thing until the losses are enough. Profit from streaming seems pretty hard to do.
A so-called “better” product that needs to be propped up for survival cannot be called successful. Amazon may be able to constantly lose money. Spotify cannot.
Apple won't introduce a simple, streaming-only app (like Spotify) and instead continues to confuse users with an iTunes app that's a cluster-f of purchase and streaming.
It's almost like Apple decided to let Microsoft and Verizon design iTunes.
I'm a big Apple fan myself, but the company needs someone at the helm with vision and no patience for terrible software.
They used to have a guy like that...
That guy also didn't want the App Store I'm not saying that he was a bad CEO, I think that he was pretty good as far as CEOs go. BUT, Steve Jobs was far from perfect, as many Apple fans believe
The financial document there shows that most if not all of their gross profit goes on sales and marketing every year and their gross margin is just 15%. They said they had 50m paying subscribers now, this works out to be 4.88 euros/month ($5.44/m). The student price is around this level at $4.99/month and the promotions also affect this:
It suggests Spotify should aim for 60m subscribers at 30% gross margin. Just now they are trying to grow subscribers with all the marketing and promos. Once they reach their goal, they can cut the marketing down. This won't help their gross margins though. Apple's going to put pressure on them with the higher subscriber rates by paying artists more per stream so their gross margins won't improve. As people settle into listening more via streaming, the payouts will increase.
Their expenses are about 800m euros. To break even on that with the same margins and assuming they can keep their costs stable, they need about 5.3b euros revenue or 80% more, from getting more subscribers and more money per subscriber. That can happen in 2-3 years at the current rate of growth.
It's unlikely that they'll become profitable before their IPO offering so this is how they'll sell it to investors, that it's in growth stage and the pay-off will come down the line after they've invested and the people involved in building Spotify have cashed out. It's plausible that it can become profitable if they can grow and maintain subscribers and cut their marketing expenses but 2-3 years of growth would just be to break even and profit will be slow in coming after that, if at all.
This is one of these companies like Amazon where they can spin all the stories about future profit and it's taken them 20 years to pull off something worthwhile. Amazon also has an infrastructure that few companies can compete with. Spotify has nothing better than any of their competitors. Once they go public, they could get bought out by one of the bigger companies (possibly even Amazon) so that they get an instant paid subscriber base. If not, it will be a stock that is manipulated for years and built up on empty hopes of future earnings.
I believe these latest figures are falsely inflated by their recent super aggressive offer for 3 months of premium for 99c. I've been sent two of these the past month. The second time I accepted it because, why not. Nevertheless I have no intention of continuing after the 3 months is up. However since I paid 99c via PayPal, they can claim me as a premium subscriber. But I'm not and never will be. Notice how this latest boast from Spotify is about a month (in my case) since they aggressively tempted me into an offer that will cost them a lot more than the 33c per month they are getting from me.
Apple Music is a failure. I said this a few weeks ago on this forum. Apple is very bad at content services, Apple wants similar profit margins as its hardware business. This is stupid. Stupid, stupid, stupid, period.
Re: "failure"...
Here is a simple calculation: Annual Revenue = 20,000,000 paid subscribers x $10/month x 12 months = $2.4 billion
It's only 2 years old.
Any business with $2.4B of revenue after only 2 years is absolutely NOT a failure. It's big, growing, and profitable.
It is not worth paying $120 per year. Amazon prime is $130 per year. You get more services besides music. Apple is fooling a lot of end users.
I think you're mistaking
'It's not worth paying'
with
'I can't afford it'
which is not really Apple's problem. Apple does not price it to grow the service into oblivion; they price it to be sustainable.
Apple won't introduce a simple, streaming-only app (like Spotify) and instead continues to confuse users with an iTunes app that's a cluster-f of purchase and streaming.
Yes, this nonsense comes up pretty regularly still; often parroted by people who haven't taken a minute to think it through. So for the pseudo-geeks out there, let's run through the logic once again: why doesn't Apple provide app for Apple Music?
An Apple customer is not interested in the source of the music; they are interested in the music. An Apple customer thinks, "I'd like to hear Sympathy for the Devil", so he then starts the music app and plays "Sympathy for the Devil" unconcerned as to whether it was a track he downloaded, ripped from a CD or streamed from Apple Music.
Under the pseudo-geek scheme, the Apple customer has to think "Now where will I find the song?" Before he can play "Sympathy for the Devil" he has to remember where to find it. "Now, do I stream that one, or did is it part of my library?"
So what you want is for Apple to introduce a scheme whereby their customers have to remember which application to use before they can play their music.
I'm a big Apple fan myself, but the company needs someone at the helm with vision and no patience for terrible software.
They used to have a guy like that...
And of course, this parroted notion is always followed by the endlessly regurgitated "I'm a true Apple believer… If only Steve were alive" line.
Apple Music is a failure. I said this a few weeks ago on this forum. Apple is very bad at content services, Apple wants similar profit margins as its hardware business. This is stupid. Stupid, stupid, stupid, period.
Apple Music has about half the paid subs as Spotify, having begun much later (2014 versus 2008) and its distribution is far narrower than Spotify's. I wouldn't call that a failure. Also, consider that Spotify is not profitable, but eventually needs to be. Apple Music may or may not be profitable, we don't know, but it doesn't need to be as it serve another purpose; to fill out the Apple ecosystem and give Apple representation as a leader in the realm of music, which has long been a part of Apple culture.
I was surprised to hear that as of WWDC 2017 Music has only 27 million subscribers. I believe at the last big Apple event they claimed 30 million. If that's the case its actually declined over the last few months rather than gain more subscribers as was expected to happen. Personally I still prefer to purchase and own my music. So maybe there are more like me out there than I thought, and we're sticking to it rather than going the streaming route.
What's the size of your music library? Let's say 6000 tracks. New music comes out every year. Let's say you add 5% to your library each year to keep it fresh. That's 300 new tracks per year, not an unreasonable number against a 6000 track library. At 99 cents to $1.29 per track, closer to $1.29 for new tracks, that means you'll spend, if you want to be legal about it, about $400/year maintaining a decent-sized music collection. Plus the cost, if you want to be legal about it, of assembling that initial 6000 tracks.
Or... you could spend $120/year to have a 40 million track collection that maintains itself each year as new music is created. Hmm.
All bets off for those freeloaders who think it's okay to steal Music.
Apple Music is a failure. I said this a few weeks ago on this forum. Apple is very bad at content services, Apple wants similar profit margins as its hardware business. This is stupid. Stupid, stupid, stupid, period.
Re: "failure"...
Here is a simple calculation: Annual Revenue = 20,000,000 paid subscribers x $10/month x 12 months = $2.4 billion
It's only 2 years old.
Any business with $2.4B of revenue after only 2 years is absolutely NOT a failure. It's big, growing, and profitable.
Profitable? Who knows. Apple did not publish the figures. I don't see any real difference in cost structure between Apple Music and Spotify. So with much less paying members Apple Music must be making a loss.
Apple won't introduce a simple, streaming-only app (like Spotify) and instead continues to confuse users with an iTunes app that's a cluster-f of purchase and streaming.
Yes, this nonsense comes up pretty regularly still; often parroted by people who haven't taken a minute to think it through. So for the pseudo-geeks out there, let's run through the logic once again: why doesn't Apple provide app for Apple Music?
An Apple customer is not interested in the source of the music; they are interested in the music. An Apple customer thinks, "I'd like to hear Sympathy for the Devil", so he then starts the music app and plays "Sympathy for the Devil" unconcerned as to whether it was a track he downloaded, ripped from a CD or streamed from Apple Music.
Under the pseudo-geek scheme, the Apple customer has to think "Now where will I find the song?" Before he can play "Sympathy for the Devil" he has to remember where to find it. "Now, do I stream that one, or did is it part of my library?"
So what you want is for Apple to introduce a scheme whereby their customers have to remember which application to use before they can play their music.
Jesus man, it's not that hard. You subscribe to a music streaming service. You just tap the icon for same. It's not like you forgot that you bought the damn thing. How the hell did we get anything done before the iPhone? It was the mush between our ears. And believe it or not, it hasn't dissolved in the last ten years.
Apple should offer a cheaper Apple Music tier. Perhaps it could be limited to a fixed number of hours usage per month.
If you rarely listen to music $9.99 is a bit steep.
The cost is a bit steep for infrequent users. I'd have no use for it at all during the summer months. However, Apple isn't going to mess up its simple business model for consumers short on funds. Apple isn't Amazon. You can either afford AppleMusic or you can't. I'm sure that's how Apple sees it.
I think, rather than providing a cheaper offering by restricting usage, they might be able to do it by restricting services -- say by simply offering the Apple Music radios for say, $4.99/month... And, for many, that might be a sweet offering -- partly because its an amount they are willing to spend and partly because, for many, Apple Music is too complicated: They don't want to have to search up and select music everytime they get in their car. They would rather just punch a button and let somebody else decide what they will listen to. And, if they don't like what the person chose, then just push another button. It's a system that has worked since the car radio was invented... It works...
With Spotify being over 5 times a large as Apple Music, will government agencies stop giving Spotify a handkerchief whenever it cries that Apple is abusing its power over the App Store? Obviously Spotify is doing something right to have so many people signing onto its service.
They're operating at a loss. That's not a sustainable business model.
Apple should offer a cheaper Apple Music tier. Perhaps it could be limited to a fixed number of hours usage per month.
If you rarely listen to music $9.99 is a bit steep.
The cost is a bit steep for infrequent users. I'd have no use for it at all during the summer months. However, Apple isn't going to mess up its simple business model for consumers short on funds. Apple isn't Amazon. You can either afford AppleMusic or you can't. I'm sure that's how Apple sees it.
I think, rather than providing a cheaper offering by restricting usage, they might be able to do it by restricting services -- say by simply offering the Apple Music radios for say, $4.99/month... And, for many, that might be a sweet offering -- partly because its an amount they are willing to spend and partly because, for many, Apple Music is too complicated: They don't want to have to search up and select music everytime they get in their car. They would rather just punch a button and let somebody else decide what they will listen to. And, if they don't like what the person chose, then just push another button. It's a system that has worked since the car radio was invented... It works...
That is certainly a service I would pay for. I am not currently a subscriber to any music service, as I am at that age where I have built up over a few decades a good enough library of music from CD's & iTunes purchases. I add to that a bit each year, but often on iTunes sales, single tracks, etc. So I don't spend the $120, and what I do spend I have access to in the future without continued expenditures. My kids listen to music mostly through YouTube...(and yes, I have tried to educate them on value of music, adequate artist compensation...to no avail).
So I like the idea of an Apple Music "radio" type service.
Also, Apple could look at bundles of their own services - iCloud storage tiers and Apple Music combined. Kind of a no-brainer it would seem, but bundles like that aren't something that Apple has really ever done.
Apple Music is a failure. I said this a few weeks ago on this forum. Apple is very bad at content services, Apple wants similar profit margins as its hardware business. This is stupid. Stupid, stupid, stupid, period.
Apple Music has about half the paid subs as Spotify, having begun much later (2014 versus 2008) and its distribution is far narrower than Spotify's. I wouldn't call that a failure. Also, consider that Spotify is not profitable, but eventually needs to be. Apple Music may or may not be profitable, we don't know, but it doesn't need to be as it serve another purpose; to fill out the Apple ecosystem and give Apple representation as a leader in the realm of music, which has long been a part of Apple culture.
Look at in another way. The 27 million Apple Music subscribers is only a fraction of iPhone users. Apple Music is not attractive to many iPhone users. Is this a stronger argument that it is a failure?
Spotify has a free tier and Apple does not. So many of the Spotify customers aren't paying for the service. Apple Music is pay only so every customer on there service pays for there music. So actually Spotify may not be so far ahead as one might think.
Apple won't introduce a simple, streaming-only app (like Spotify) and instead continues to confuse users with an iTunes app that's a cluster-f of purchase and streaming.
Yes, this nonsense comes up pretty regularly still; often parroted by people who haven't taken a minute to think it through. So for the pseudo-geeks out there, let's run through the logic once again: why doesn't Apple provide app for Apple Music?
An Apple customer is not interested in the source of the music; they are interested in the music. An Apple customer thinks, "I'd like to hear Sympathy for the Devil", so he then starts the music app and plays "Sympathy for the Devil" unconcerned as to whether it was a track he downloaded, ripped from a CD or streamed from Apple Music.
Under the pseudo-geek scheme, the Apple customer has to think "Now where will I find the song?" Before he can play "Sympathy for the Devil" he has to remember where to find it. "Now, do I stream that one, or did is it part of my library?"
So what you want is for Apple to introduce a scheme whereby their customers have to remember which application to use before they can play their music.
Jesus man, it's not that hard. You subscribe to a music streaming service. You just tap the icon for same. It's not like you forgot that you bought the damn thing. How the hell did we get anything done before the iPhone? It was the mush between our ears. And believe it or not, it hasn't dissolved in the last ten years.
No his point is valid -- a stand alone AM streaming app would be more work for the user, because I'd have to know whether the music i want to hear is in my local library or in the streamer app. With AM it doesn't matter and i don't care. My local music and the entire AM catalog are essentially the same. I can mix and match them in playlists, use one app, one siri, etc... It's much easier than a stand alone AM app would be.
Comments
Yeah, it’s losing money. The ONLY reason it SEEMS successful is its cheaptard parasites. Nothing is free and Spotify will die the death of a thousand cuts. Spotify is not Google or Amazon you know.
I'm not saying that he was a bad CEO, I think that he was pretty good as far as CEOs go. BUT, Steve Jobs was far from perfect, as many Apple fans believe
https://gd.lu/rcsl/15WNGz
The financial document there shows that most if not all of their gross profit goes on sales and marketing every year and their gross margin is just 15%. They said they had 50m paying subscribers now, this works out to be 4.88 euros/month ($5.44/m). The student price is around this level at $4.99/month and the promotions also affect this:
https://musicindustryblog.wordpress.com/2016/05/25/the-2-spotify-charts-you-need-to-see/
The following contrasts Spotify's model with Netflix:
https://www.musicbusinessworldwide.com/why-netflixs-growing-profits-will-have-left-spotify-sweating/
It suggests Spotify should aim for 60m subscribers at 30% gross margin. Just now they are trying to grow subscribers with all the marketing and promos. Once they reach their goal, they can cut the marketing down. This won't help their gross margins though. Apple's going to put pressure on them with the higher subscriber rates by paying artists more per stream so their gross margins won't improve. As people settle into listening more via streaming, the payouts will increase.
Their expenses are about 800m euros. To break even on that with the same margins and assuming they can keep their costs stable, they need about 5.3b euros revenue or 80% more, from getting more subscribers and more money per subscriber. That can happen in 2-3 years at the current rate of growth.
It's unlikely that they'll become profitable before their IPO offering so this is how they'll sell it to investors, that it's in growth stage and the pay-off will come down the line after they've invested and the people involved in building Spotify have cashed out. It's plausible that it can become profitable if they can grow and maintain subscribers and cut their marketing expenses but 2-3 years of growth would just be to break even and profit will be slow in coming after that, if at all.
This is one of these companies like Amazon where they can spin all the stories about future profit and it's taken them 20 years to pull off something worthwhile. Amazon also has an infrastructure that few companies can compete with. Spotify has nothing better than any of their competitors. Once they go public, they could get bought out by one of the bigger companies (possibly even Amazon) so that they get an instant paid subscriber base. If not, it will be a stock that is manipulated for years and built up on empty hopes of future earnings.
'It's not worth paying'
with
'I can't afford it'
which is not really Apple's problem. Apple does not price it to grow the service into oblivion; they price it to be sustainable.
Yes, this nonsense comes up pretty regularly still; often parroted by people who haven't taken a minute to think it through. So for the pseudo-geeks out there, let's run through the logic once again: why doesn't Apple provide app for Apple Music?
An Apple customer is not interested in the source of the music; they are interested in the music. An Apple customer thinks, "I'd like to hear Sympathy for the Devil", so he then starts the music app and plays "Sympathy for the Devil" unconcerned as to whether it was a track he downloaded, ripped from a CD or streamed from Apple Music.
Under the pseudo-geek scheme, the Apple customer has to think "Now where will I find the song?" Before he can play "Sympathy for the Devil" he has to remember where to find it. "Now, do I stream that one, or did is it part of my library?"
So what you want is for Apple to introduce a scheme whereby their customers have to remember which application to use before they can play their music.
And of course, this parroted notion is always followed by the endlessly regurgitated "I'm a true Apple believer… If only Steve were alive" line.
Or... you could spend $120/year to have a 40 million track collection that maintains itself each year as new music is created. Hmm.
All bets off for those freeloaders who think it's okay to steal Music.
I don't see any real difference in cost structure between Apple Music and Spotify. So with much less paying members Apple Music must be making a loss.
So I like the idea of an Apple Music "radio" type service.
Also, Apple could look at bundles of their own services - iCloud storage tiers and Apple Music combined. Kind of a no-brainer it would seem, but bundles like that aren't something that Apple has really ever done.