Spotify loses $23.6 million in Q3, misses total user targets

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Comments

  • Reply 21 of 33
    Music streaming is a tough low margin business. I use Apple Music but I think Spotify is a good music streaming service. But Spotify is only a music streaming service, it's where the vast amount of revenue comes from. Margins are just too small to eke much if any profit after ops/cost and debt servicing. They've got a big user base, now they need to figure out something these users want other than music. Spotify sees money in Podcasts and is spending a lot to make it happen. Maybe that'll be the trick. Maybe something else in the wings. It can't just be music with these ops costs.

    Spotify is a data mining monetizer. On this one I'm surprised they can't eke out enough to come closer to break even. Data mining ad monetization has big potential money.
  • Reply 22 of 33
    mcdavemcdave Posts: 1,927member
    Is a 100% market share to break even business strategy flawed?
  • Reply 23 of 33
    BeatsBeats Posts: 3,073member
    sbdude said:
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.

    Music subscription may well be a loss-leader if spotify is any indication. Surely apple music, if it is a money loser, will drive some to purchase apple hardware. And, if it's a race to the bottom, and no alternative revenue source, spotify will be the biggest loser here.

    i don’t see Apple Music being a loss-leader at all. For one Apple doesn’t do loss leaders. If Apple makes more money selling one .99 cent song on iTunes then Apple wouldn’t jump into Apple Music. Another thing is, Apple promotes Apple Music far far far more than iTunes. Why would Apple go all in on Apple Music and ignore iTunes if Apple Music loses money while all iTunes has to do is sell one .99 cent song to make more money than Apple Music in the past 6 years? Apple is pushing Apple Music because it’s making money, more money than iTunes.
    edited July 2021
  • Reply 24 of 33
    Beats said:
    sbdude said:
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.

    Music subscription may well be a loss-leader if spotify is any indication. Surely apple music, if it is a money loser, will drive some to purchase apple hardware. And, if it's a race to the bottom, and no alternative revenue source, spotify will be the biggest loser here.

    i don’t see Apple Music being a loss-leader at all. For one Apple doesn’t do loss leaders. If Apple makes more money selling one .99 cent song on iTunes then Apple wouldn’t jump into Apple Music. Another thing is, Apple promotes Apple Music far far far more than iTunes. Why would Apple go all in on Apple Music and ignore iTunes if Apple Music loses money while all iTunes has to do is sell one .99 cent song to make more money than Apple Music in the past 6 years? Apple is pushing Apple Music because it’s making money, more money than iTunes.

    Yep, Apple wouldn't hold onto a money loser this long. But Apple has a few advantages. The mechanics  of the delivery itself will be something Apple can do more cheaply due to overall many other services (they can get pricing of being a huge client and/or able to spend on its own DC to ultimately reduce costs over time). Apple also has the ability to take A and get added revenue from B. This is what  Spotify needs to get figured out. Apple Music can generate users to signup for other Apple revenue streams. It's ok to take a loss on A if the resulting B business more than makes up for it. 
    Spotify must monetize its user base more than just music. It's currently just not profitable enough. They may be able to eke out small profits but that's unsustainable. Running losses means debt service.  But their stock price suggests there are investment companies who believe they will do it.
    transmaster
  • Reply 25 of 33
    BeatsBeats Posts: 3,073member
    Beats said:
    sbdude said:
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.

    Music subscription may well be a loss-leader if spotify is any indication. Surely apple music, if it is a money loser, will drive some to purchase apple hardware. And, if it's a race to the bottom, and no alternative revenue source, spotify will be the biggest loser here.

    i don’t see Apple Music being a loss-leader at all. For one Apple doesn’t do loss leaders. If Apple makes more money selling one .99 cent song on iTunes then Apple wouldn’t jump into Apple Music. Another thing is, Apple promotes Apple Music far far far more than iTunes. Why would Apple go all in on Apple Music and ignore iTunes if Apple Music loses money while all iTunes has to do is sell one .99 cent song to make more money than Apple Music in the past 6 years? Apple is pushing Apple Music because it’s making money, more money than iTunes.

    Yep, Apple wouldn't hold onto a money loser this long. But Apple has a few advantages. The mechanics  of the delivery itself will be something Apple can do more cheaply due to overall many other services (they can get pricing of being a huge client and/or able to spend on its own DC to ultimately reduce costs over time). Apple also has the ability to take A and get added revenue from B. This is what  Spotify needs to get figured out. Apple Music can generate users to signup for other Apple revenue streams. It's ok to take a loss on A if the resulting B business more than makes up for it. 
    Spotify must monetize its user base more than just music. It's currently just not profitable enough. They may be able to eke out small profits but that's unsustainable. Running losses means debt service.  But their stock price suggests there are investment companies who believe they will do it.

    I just realized something. Apple Music is on Android so it must make a profit. Otherwise there goes the theory of ecosystem stickiness.

    Why would Apple extend their losses to Android and create less reason to buy Apple hardware and Apple services which aren’t available on Android? The answer is to make more money.
  • Reply 26 of 33
    Rayz2016Rayz2016 Posts: 6,957member
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.
    And that’s why the need to come up with something else so they can make the service profitable. If they’re losing money on every subscriber then what’s missing is an additional service that would warrant a price hike. 

     Streaming services aren’t going to make money; they’re part (a compulsory part) of a services strategy that is profitable. 
  • Reply 27 of 33
    One would think the EU itself is the angel investor in Spotify.
    viclauyyc
  • Reply 28 of 33
    uraharaurahara Posts: 733member
    6502 said:
    Had Spotify premium for my daughter, canceled it last month and switched to YouTube Premium - music and ad-free youtube for about the same price. Got charged again this month for Spotify. Turns out you have to hit cancel on 5 different pages to cancel Spotify. They are worse than a timeshare company. They are scum, will never go back for any reason.
    Is it really 5 pages? Or maybe 4. Or even 3?
    So you are saying you didn't read, didn't get any confirmation but assumed you canceled. And now you blame Spotify for your mistake not going thoroughly. 
    You...people...


  • Reply 29 of 33
    crowleycrowley Posts: 10,453member
    One would think the EU itself is the angel investor in Spotify.
    Why?  The EU doesn't give Spotify any money, or force any investors to give Spotify any money.
  • Reply 30 of 33
    IreneWIreneW Posts: 303member
    Beats said:
    Beats said:
    sbdude said:
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.

    Music subscription may well be a loss-leader if spotify is any indication. Surely apple music, if it is a money loser, will drive some to purchase apple hardware. And, if it's a race to the bottom, and no alternative revenue source, spotify will be the biggest loser here.

    i don’t see Apple Music being a loss-leader at all. For one Apple doesn’t do loss leaders. If Apple makes more money selling one .99 cent song on iTunes then Apple wouldn’t jump into Apple Music. Another thing is, Apple promotes Apple Music far far far more than iTunes. Why would Apple go all in on Apple Music and ignore iTunes if Apple Music loses money while all iTunes has to do is sell one .99 cent song to make more money than Apple Music in the past 6 years? Apple is pushing Apple Music because it’s making money, more money than iTunes.

    Yep, Apple wouldn't hold onto a money loser this long. But Apple has a few advantages. The mechanics  of the delivery itself will be something Apple can do more cheaply due to overall many other services (they can get pricing of being a huge client and/or able to spend on its own DC to ultimately reduce costs over time). Apple also has the ability to take A and get added revenue from B. This is what  Spotify needs to get figured out. Apple Music can generate users to signup for other Apple revenue streams. It's ok to take a loss on A if the resulting B business more than makes up for it. 
    Spotify must monetize its user base more than just music. It's currently just not profitable enough. They may be able to eke out small profits but that's unsustainable. Running losses means debt service.  But their stock price suggests there are investment companies who believe they will do it.

    I just realized something. Apple Music is on Android so it must make a profit. Otherwise there goes the theory of ecosystem stickiness.

    Why would Apple extend their losses to Android and create less reason to buy Apple hardware and Apple services which aren’t available on Android? The answer is to make more money.
    Apple Music is on Android because the only thing that matters at this point is expanding and gaining market share. Which is why investors are happy to give Spotify money to aggressively buy in to new markets. Both Spotify and Apple can afford to do so, with huge losses, because the two or three de facto market leaders will set the rules for the future streaming market. 
    You may despise Spotify (and/or Apple) but the fact is that artists have no choice but to accept the terms and conditions.
    Instead, it is the next step that will be interesting: what happens to the record companies when Spotify (and Apple?) starts negotiating and writing contracts directly with the artists? This is already happening.
  • Reply 31 of 33
    crowley said:
    One would think the EU itself is the angel investor in Spotify.
    Why?  The EU doesn't give Spotify any money, or force any investors to give Spotify any money.

    The EU is protecting a Euro based company from an evil American company. Any excuse Brussels can use to screw over an American company they will use. 


    viclauyycwatto_cobra
  • Reply 32 of 33
    BeatsBeats Posts: 3,073member
    IreneW said:
    Beats said:
    Beats said:
    sbdude said:
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.

    Music subscription may well be a loss-leader if spotify is any indication. Surely apple music, if it is a money loser, will drive some to purchase apple hardware. And, if it's a race to the bottom, and no alternative revenue source, spotify will be the biggest loser here.

    i don’t see Apple Music being a loss-leader at all. For one Apple doesn’t do loss leaders. If Apple makes more money selling one .99 cent song on iTunes then Apple wouldn’t jump into Apple Music. Another thing is, Apple promotes Apple Music far far far more than iTunes. Why would Apple go all in on Apple Music and ignore iTunes if Apple Music loses money while all iTunes has to do is sell one .99 cent song to make more money than Apple Music in the past 6 years? Apple is pushing Apple Music because it’s making money, more money than iTunes.

    Yep, Apple wouldn't hold onto a money loser this long. But Apple has a few advantages. The mechanics  of the delivery itself will be something Apple can do more cheaply due to overall many other services (they can get pricing of being a huge client and/or able to spend on its own DC to ultimately reduce costs over time). Apple also has the ability to take A and get added revenue from B. This is what  Spotify needs to get figured out. Apple Music can generate users to signup for other Apple revenue streams. It's ok to take a loss on A if the resulting B business more than makes up for it. 
    Spotify must monetize its user base more than just music. It's currently just not profitable enough. They may be able to eke out small profits but that's unsustainable. Running losses means debt service.  But their stock price suggests there are investment companies who believe they will do it.

    I just realized something. Apple Music is on Android so it must make a profit. Otherwise there goes the theory of ecosystem stickiness.

    Why would Apple extend their losses to Android and create less reason to buy Apple hardware and Apple services which aren’t available on Android? The answer is to make more money.
    Apple Music is on Android because the only thing that matters at this point is expanding and gaining market share. Which is why investors are happy to give Spotify money to aggressively buy in to new markets. Both Spotify and Apple can afford to do so, with huge losses, because the two or three de facto market leaders will set the rules for the future streaming market. 
    You may despise Spotify (and/or Apple) but the fact is that artists have no choice but to accept the terms and conditions.
    Instead, it is the next step that will be interesting: what happens to the record companies when Spotify (and Apple?) starts negotiating and writing contracts directly with the artists? This is already happening.

    Your last paragraph makes the most sense. Originally I thought the point of Apple Music was for people to self-publish like the App Store. What’s taking so long??
  • Reply 33 of 33
    crowley said:
    One would think the EU itself is the angel investor in Spotify.
    Why?  The EU doesn't give Spotify any money, or force any investors to give Spotify any money.
    Tongue in cheek. I wasn't serious.
    watto_cobra
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