Apple Music breaks through to 30 million subscribers

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Comments

  • Reply 21 of 36
    melgrossmelgross Posts: 31,693member
    sog35 said:
    melgross said:
    sog35 said:
    melgross said:
    sog35 said:
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    $9.95 is enough to make profit.

    Problem is companies like Spotify/Pandora are spending a ridiculous amount of money on marketing/advertising.

    For example last year:

    Pandora:  $1.4 billion in revenue.  $500 million in gross profit. 

    That's a 36% Gross profit rate. That's almost as high as Apple as a whole!

    But the problem is Pandora spent $800 million in selling, admin, and R&D!!!!

    If they cut those overhead expenses, Pandora could easily be profitable.  But the problem is they are in mega growth mode, so they are spending like crazy to get new subs.
    It’s not enough to make a profit, and never has been. And marketing is a major thing for content. When a major movie comes out, marketing costs can easily exceed the costs of producing the movie. Most of the costs in producing popular music has always been in the marketing. Like it or not, that’s the way it is.

    gross is not profit. I know that sometimes it’s called profit, but it’s not. Profit is net, not gross, and not operating. Apple makes net profits of about 20-21%. That’s actual profit.
    What does movie marketing have to do with Pandora? Nothing. Two totally different types of businesses.  Pandora isn't making movies or selling music albums. They are a streaming service and they don't need nearly as much marketing expense to stablize sales. The Movie/Album business is a hits business. So they do need massive advertising/marketing everytime they release a new movie/song.

    My point is if Pandora stopped running massive marketing campaigns to add customers, they could easily make a profit.

    35% gross profit is massive. Note that Apple's gross profit is about 38%
    It has everything to do with it. If they dropped their marketing to levels that would make you happy, they would lose customers.

    just stop talking about gross “profits”. First of all it’s not “massive” and secondly, it’s not profit. Again, only “net” is profit. Read the link below. You’ll notice that their revenue from subscriptions is minuscule, and most all of it comes from advertising. Then you’ll also notice that their net=profit or loss, is a big loss, again. No profits there. Gross is not profit, only net.

    http://investor.pandora.com/file/Index?KeyFile=389688848
    Why would they lose customers if they stop advertising?

    Are you telling me the only reason customers stay on the platform is because they see ads about Spotify?  I doubt it.

    The ads are for NEW subscribers.  With a subscription service you don't need to run ads for current subscribers because they are already locked in. You run ads to attract new customers.

    My main point is Music streaming can be a profitable business once you are not trying to grow your subscriber base rapidly.  The reason Pandora/Spotify are losing money is because they are trying for maximum growth in minimum time.  If all they had to do is cater for their current subscribers, their advertising/marketing expenses would drop significantly.
    Well, at least you’re not saying how much profit they’re making.

    as Brucemc says, there’s churn. These companies don’t get a customer, and then they’re a customer for life. Some customers may not like the software, some may not like other policies. Some may just get bored. Some may think support is poor. The same reasons customers leave any business. And if they want to grow, they have to be seen everywhere. Remember Apple’s iPod and iTunes Ads? They were everywhere. Apple spent a lot of money on those.

    going back a long time, I remember an article I read in advertising age about why so many early Tv manufacturers went out of business. It turns out that of you have 5% marketshare, you still need to advertise about as much as the big guys with 20% marketshare. That’s a killer, long term. Keeping your name out there is very important. I know a lot of people don’t like advertising, and they think it’s not really needed, or not needed much. But that’s not true. There is a direct correlation between sales and advertising spends, as it’s called. Companies reduce advertising, and sales go down. When churn is high, as it is in this business, you just have to advertise. If your competitors can afford to spend more, then you’re in trouble. You get lost in the noise.
    radarthekatpscooter63watto_cobra
  • Reply 22 of 36
    melgrossmelgross Posts: 31,693member

    brucemc said:
    Every service has "churn" (people leave for any number of reasons), and if you are not signing up new customers faster, your subscriber base drops.  If sales and advertising budget are cut, then it affects the latter.  It is not a hard concept.

    The term "gross profit" is misapplied - perhaps what is meant is "gross margin" (revenue of goods sold - cost of goods to produce).
    Yes, gross margin is correct. But companies sometimes still use the terms gross profit, and operating profit, even though it’s not correct. Even Pandora did it in their quarterly report, which is why, since it’s usually first in the line items in the report, people who don’t understand it, stop at that, and don’t bother to read further down.
  • Reply 23 of 36
    melgrossmelgross Posts: 31,693member
    ksec said:
    1. I dont know how that 3 Billion yearly revenue for Apple Music was calculated, 30 Million paying subs, with family member plans, student plans, countries which charges less then $10 per month. Minus Music Label company collection, Apple dont make much, if any money out of it Apple Music.  So no, one make it sound like Apple instantly make all the money back they bought for Beats from Apple Music. Although i must say the headphones are doing well for Back to School Promotion.

    2. They are may be millions of hard working people. So Iovine working hard does not mean he is working good. And I bet he doesn't work any longer hours then Marissa Meyers. The point is, like Steve Jobs have said, "Somewhere between the janitor and the CEO, reasons stop mattering," that Rubicon is "crossed when you become a VP." If you live in US ( And possibly UK or some part of Europe ), great. Apple Music has a fairly decent music collection, so despite its utter failure in Application UX Design, it is doing fine against Sportify. Elsewhere around the world, Apple Music is utter crap.

    3. It is good though I think Iovine has learned, or may be he has been pressured from others, not to go on about the Next Song.

    4. Iovine taste on speakers is more bass and more Bass, which he said the unimproved, first version of Beats were great and Apple's Earpod were crap. Holy smoke. Interestingly somewhere along the line Beats start to produce slightly more "balanced" sounding headphones that were only slightly better then original, and since Apple bought them they have improved a lot. I was worry this madness and disease of Bass taste will spread into Apple, luckily it did not. 

    5. Iovine has also stopped mumbling on about Music Discovery, because the Data has shown, apart from those ~10% Music fans who love new way to find out new music, majority of users dont sign up a subscription to discover new music. The Apple Music UI design has reflected on this changes as well to be less about what Iovine's dream of everyone searching for new music. It was may be a noble goal, but either people dont want it or his implementation of the idea does not work.

    6. I still strongly believe, Music Subscription wont last. Buying Music will come back, as I have recently learned, Subscription Music sometimes means they could take away my Songs whenever the two company dont have a deal. Or we make a better way to fuse the two together or fix this problem.

    7. Apple Music will need to improve a lot. It is not all Iovine 's fault. Apple Map in Japan is totally unusable. And Japan used to be Apple's biggest International market before China grew so large. Given Apple's half hearted attempt in market other then English Speaking counties, there are things they simply dont get it.

     

    I don’t believe that anyone who actually thinks about it expects Apple to make a profit on this any more than they do on software they give away. It’s a gateway, another reason to buy into Apple’s hardware and overall ecology. My daughter used to use Spotify, now she, and most of her friends have switched to Apple Music. They actually like the software better.

    iovine is considered to be a genius in this business. Don’t underestimate him. He’s not good at public speaking, and so some people think he’s not together, but he is. So is Dr. Dre, even if some people don’t like him.

    i didn’t use to think that streaming would catch on, but it has. At first, it went nowhere, then they started to give some songs away that you could keep if you dropped the service.

    these days, the fear of not owning the music is over for most people. The idea of streaming is now so ensconced in our thinking, because with the arrival of big companies, people know that if they drop one service, they’re just going to join another, and nothing gained, but nothing lost either.
    edited September 2017 radarthekatwatto_cobra
  • Reply 24 of 36
    sog35 said:
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    $9.95 is enough to make profit.

    Problem is companies like Spotify/Pandora are spending a ridiculous amount of money on marketing/advertising.

    For example last year:

    Pandora:  $1.4 billion in revenue.  $500 million in gross profit. 

    That's a 36% Gross profit rate. That's almost as high as Apple as a whole!

    But the problem is Pandora spent $800 million in selling, admin, and R&D!!!!

    If they cut those overhead expenses, Pandora could easily be profitable.  But the problem is they are in mega growth mode, so they are spending like crazy to get new subs.
    I enjoy Pandora. It’s got everything I need...
  • Reply 25 of 36
    slurpy said:
    So, Apple wasn't even in the streaming music business a couple of years ago. Today, they already have 50% the amt of paid customers as the most popular streaming service in the world which has been out for MANY years longer. That's a massive win, and numbers will only increase from here. For anyone in the Apple ecosystem, Apple music delivers tremendous advantages in terms of integration throughout their devices.

    I think it's more than 50%. Everyone and their dog gives away a free Spotify subscription these days. Buy a TV, phone, tablet, PC or kitchen sink, get a free Spotify subscription. While Apple likely gets subscriptions simply because it's already on your device, at least they're all making the decision to buy a subscription and not using something they were given.

    For 2016 Spotify made $2.76 billion in subscription revenues for an average monthly revenue of only $6.21 per subscriber. Before someone chimes in with the inevitable "student discount" subscription - that's only available in a limited number of countries. Clearly some of those subscriptions were free giveaways.

    Even worse, Spotify only made $308 million in ad revenue for the free listeners. That's a pathetic amount of revenue for their largest group of users. They're going to keep losing money if they don't change their business model.

    watto_cobra
  • Reply 26 of 36
    melgross said:

    brucemc said:
    Every service has "churn" (people leave for any number of reasons), and if you are not signing up new customers faster, your subscriber base drops.  If sales and advertising budget are cut, then it affects the latter.  It is not a hard concept.

    The term "gross profit" is misapplied - perhaps what is meant is "gross margin" (revenue of goods sold - cost of goods to produce).
    Yes, gross margin is correct. But companies sometimes still use the terms gross profit, and operating profit, even though it’s not correct. Even Pandora did it in their quarterly report, which is why, since it’s usually first in the line items in the report, people who don’t understand it, stop at that, and don’t bother to read further down.
    Besides, comparing two companies based on profit alone is laughable, at best. 
  • Reply 27 of 36
    SoliSoli Posts: 8,858member
    For 2016 Spotify made $2.76 billion in subscription revenues for an average monthly revenue of only $6.21 per subscriber. Before someone chimes in with the inevitable "student discount" subscription - that's only available in a limited number of countries. Clearly some of those subscriptions were free giveaways.
    I assume that other countries also have different rates. I could see certain markets having costs that are closer to $6.21 than $10. And how does it break down when you pay $15/month for up to 5 people with family plan (what I'm on)? How does it break down when the student plan also includes Hulu for that $4.99 price (which is pretty great deal)?
    watto_cobra
  • Reply 28 of 36
    radarthekatradarthekat Posts: 3,054moderator
    sog35 said:
    slurpy said:
    So, Apple wasn't even in the streaming music business a couple of years ago. Today, they already have 50% the amt of paid customers as the most popular streaming service in the world which has been out for MANY years longer. That's a massive win, and numbers will only increase from here. For anyone in the Apple ecosystem, Apple music delivers tremendous advantages in terms of integration throughout their devices.
    Personally I don't like Apple Music.  I had it for 1 year and it was not worth it.

    IMO, all music streaming sucks.

    Instead of paying $120 a year, I'd rather just buy 100 songs every year. And keep them FOREVER.  
    A reasonably expansive music library might contain 6000 tracks.  And would need to be refreshed as new music is released, with perhaps 300 new tracks per year.  With a streaming service like Apple Music you can have that many tracks, or 60,000 if you like, organized into playlists and even downloaded (if you have sufficient storage) and keep it refreshed from 40 million available tracks.  For a lifetime cost that’s less than the cost of initially [legally] acquiring the initial 6000 track library. 
  • Reply 29 of 36
    radarthekatradarthekat Posts: 3,054moderator
    sog35 said:
    melgross said:
    sog35 said:
    melgross said:
    sog35 said:
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    $9.95 is enough to make profit.

    Problem is companies like Spotify/Pandora are spending a ridiculous amount of money on marketing/advertising.

    For example last year:

    Pandora:  $1.4 billion in revenue.  $500 million in gross profit. 

    That's a 36% Gross profit rate. That's almost as high as Apple as a whole!

    But the problem is Pandora spent $800 million in selling, admin, and R&D!!!!

    If they cut those overhead expenses, Pandora could easily be profitable.  But the problem is they are in mega growth mode, so they are spending like crazy to get new subs.
    It’s not enough to make a profit, and never has been. And marketing is a major thing for content. When a major movie comes out, marketing costs can easily exceed the costs of producing the movie. Most of the costs in producing popular music has always been in the marketing. Like it or not, that’s the way it is.

    gross is not profit. I know that sometimes it’s called profit, but it’s not. Profit is net, not gross, and not operating. Apple makes net profits of about 20-21%. That’s actual profit.
    What does movie marketing have to do with Pandora? Nothing. Two totally different types of businesses.  Pandora isn't making movies or selling music albums. They are a streaming service and they don't need nearly as much marketing expense to stablize sales. The Movie/Album business is a hits business. So they do need massive advertising/marketing everytime they release a new movie/song.

    My point is if Pandora stopped running massive marketing campaigns to add customers, they could easily make a profit.

    35% gross profit is massive. Note that Apple's gross profit is about 38%
    It has everything to do with it. If they dropped their marketing to levels that would make you happy, they would lose customers.

    just stop talking about gross “profits”. First of all it’s not “massive” and secondly, it’s not profit. Again, only “net” is profit. Read the link below. You’ll notice that their revenue from subscriptions is minuscule, and most all of it comes from advertising. Then you’ll also notice that their net=profit or loss, is a big loss, again. No profits there. Gross is not profit, only net.

    http://investor.pandora.com/file/Index?KeyFile=389688848
    Why would they lose customers if they stop advertising?

    Are you telling me the only reason customers stay on the platform is because they see ads about Spotify?  I doubt it.

    The ads are for NEW subscribers.  With a subscription service you don't need to run ads for current subscribers because they are already locked in. You run ads to attract new customers.

    My main point is Music streaming can be a profitable business once you are not trying to grow your subscriber base rapidly.  The reason Pandora/Spotify are losing money is because they are trying for maximum growth in minimum time.  If all they had to do is cater for their current subscribers, their advertising/marketing expenses would drop significantly.
    Shh, let’s not talk about attrition, or about competition luring away customers, or about artists deciding to give exclusives base upon where they see the market going/growing.  Or about services like Apple Music potentially subsidizing new artists in exchange for a period of exclusivity or other maneuvers that bolster the value of their service over others that might have decided to reduce marketing in an effort to profit off a static, and arguably attritting user base.  Let’s not talk about any of those business realities that would muddy an otherwise idealistic position. 
  • Reply 30 of 36
    I am a current AM subscriber, but I have decided to cancel my membership when it expires in about a week. Reason is that 1) iTunes has such an ugly interface for interacting, and 2) most importantly, I don't like the music when I get when I have various radio stations. The same things keep on playing, nothing new appears, and I don't know how to change it to broaden the music. Too many things get played that I don't like.
  • Reply 31 of 36
    I'm on a 6 month "free" membership that came with my new iPhone 8 Plus from EE and I use it but I still think the interface is rather uninspired and basic functions are missing (hello? No equalizer?).

    I also realised through paid membership (mainly Spotify) that I always end up listenig to music I already own anyway so not sure how I feel about paying £9.99 a month for the rest of my life..?  How does everyone else feel about it?  

    I think purchase prices are still very reasonable for music (in contrast to films and especially tv shows) so I might go back to that. 

  • Reply 32 of 36
    at 30 million subs, I estimate it’s now at about a $3 billion annual revenue run rate.  Hey, wait...  isn’t that what Apple paid to acquire Beats?  Seems they got the hardware for free.
    You are confusing revenue and profit. You can't buy anything with revenue until the costs are taken out
  • Reply 33 of 36
    Apple should buy Rolling Stone Magazine, reduce the political and social aspects and return to the focus of the '70's of being about music. Get journalist and writers who live and breathe music. Use Rolling Stone Magazine through out AM. Revamp AM with more artwork and articles relevant to the music / artist. Create the culture of what Record Stores use to provide. I am not sure how to explain it, but feel Apple somehow needs to reintroduce subscribers to music and the artist.
    edited September 2017 london11
  • Reply 34 of 36
    ksec said:
    Apple Map in Japan is totally unusable. 
    What are you smoking there? Apple Maps is great here in Japan, for general map views (including Fly Over for several cities, should anyone want it) and transit. I absolutely reply on the transit feature here – it even handles buses, which I always avoided due to the hassle of trying to figure out what buses go where. Now Apple Maps buses me all over.

    The service does need better location data: restaurants, shops, etc. There's plenty on the map, but it's too incomplete. (Google Maps does a better job here, though it's hardly perfect either.)

    That weakness aside, Apple Maps is one of the best things about having an iPhone in Japan!
  • Reply 35 of 36
    melgrossmelgross Posts: 31,693member
    hexclock said:
    melgross said:

    brucemc said:
    Every service has "churn" (people leave for any number of reasons), and if you are not signing up new customers faster, your subscriber base drops.  If sales and advertising budget are cut, then it affects the latter.  It is not a hard concept.

    The term "gross profit" is misapplied - perhaps what is meant is "gross margin" (revenue of goods sold - cost of goods to produce).
    Yes, gross margin is correct. But companies sometimes still use the terms gross profit, and operating profit, even though it’s not correct. Even Pandora did it in their quarterly report, which is why, since it’s usually first in the line items in the report, people who don’t understand it, stop at that, and don’t bother to read further down.
    Besides, comparing two companies based on profit alone is laughable, at best. 
    Not really. If one company always takes losses, then that says that the company isn’t viable. These are businesses, and the business of a business is to make a profit. These companies have to constantly find outside funding. At some point, outside sources stop investing. When that happens, the company either goes out of business, or gets bought up, usually at a bargain price, and may just fade away. It happens all the time.
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