Spotify posts another big operating loss, but growing subscribers

Comments

• Reply 1 of 12

  red oak Posts: 1,091member

  January 31, 2023 2:40PM

  
  

  “Where I do my best work”.    What an inflated ego
  
  If you can’t make a profit with 400 millions subs, your never going to.   Ever.   But go ahead and blame Apple for all your business model woes 

  
• Reply 2 of 12

  tht Posts: 5,467member

  January 31, 2023 3:39PM

  They were 70m in the hole in cash flow. 600 layoffs is about 30m save per quarter. More layoffs coming? If their net cash flow is negative, they aren't going to make payroll, right?

  
• Reply 3 of 12

  mark fearing Posts: 421member

  January 31, 2023 4:57PM

  They seem to be running a scam. Much like the 'old' internet days - "we have a business that gives way free waffles. At some point we will have billions of customers. Then we will, ah, figure out some way to make money"... PERHAPS the entire business is rooted in B.S.

  
• Reply 4 of 12

  danox Posts: 2,920member

  January 31, 2023 6:12PM

  Tweet Tweet…… it’s Apple’s fault.  

  edited January 2023
• Reply 5 of 12

  cgWerks Posts: 2,952member

  January 31, 2023 6:27PM

  They were just going for numbers (which they partly achieved), and had enough ‘free’ money to spend like a drunken sailor. But, I think those days are over. Now they will have to start turning a profit and doing realistic business. They blew a ton of money trying to force their way into podcasting, and don’t have a lot to show for it (fortunately, they want to control and ruin it, it seems).
  
  They should just stick to being a solid music streaming service, but I’m not sure their model based on that works financially.

  
• Reply 6 of 12

  chadbag Posts: 2,003member

  January 31, 2023 6:40PM

  You know what they call it when you keep doing the same thing over and over and expecting a different result…

  
• Reply 7 of 12

  grandact73 Posts: 30member

  January 31, 2023 8:15PM

  Spotify is still the best music player available.
• Reply 8 of 12

  danox Posts: 2,920member

  January 31, 2023 8:55PM

  grandact73 said:

  Spotify is still the best music player available.

  Actually, Flac isn’t that bad available for download at the Apple Store, very good, and stays out of your way, allows you to listen to music and nothing but music.
• Reply 9 of 12

  anonconformist Posts: 199member

  January 31, 2023 10:10PM

  Watched the Netflix short series on this on Saturday. I would have thought if they couldn’t make the financials work via leveraging peer-to-peer redundancy and providing for others, it makes even less financial sense to move to using all their own servers. I found it interesting that it involved a little “what if?” Into 2025 where they’re looking to get another billion in funding.
  
  if they nave 400 million users now (especially monthly) a billion $ doesn’t go far, that’s $2.50/user should that projection remain the same borrowing with the current number of users.
  
  They’ve now got what seems like sufficient scale that there are a couple things going:
  
  

  1. they should have economies of scale with so many users, even with servers around the world, if they do it right. Of course, a big emphasis in that series was on latency, so perhaps demanding too low of a latency ruins that
  2. They’re already in the realm of the lass of big numbers that also means in practice, since they’ve been around long enough and enough people know of it, if they were going to get more people as customers, they most probably would already have them: there’s a much harder fight to get more paying customers beyond a certain point, and there’s Pareto’s Law which says 20% of your effort gets 80% of the benefits and the other 20% (if you go for it) will take 80% of the effort. They’ve likely already dug into that attempt at the unprofitable 80% of the potential market.

  There is also the issue that music is an IP commodity. It makes sense as a loss leader to get people to buy other goods and services, but you need to have profitable goods and services that fit, and it appears they’ve not found that yet.

  
  
  

  
• Reply 10 of 12

  tht Posts: 5,467member

  January 31, 2023 10:33PM

  anonconformist said:

  There is also the issue that music is an IP commodity. It makes sense as a loss leader to get people to buy other goods and services, but you need to have profitable goods and services that fit, and it appears they’ve not found that yet.

  I think the typical plan is to become a monopolist aggregator for music streaming, to a point that the music industry relies on Spotify for money, and has no other options. If that happens, Spotify will squeeze the music labels for cheaper, more profitable, licensing terms.
  
  Paying licenses for music IP is like 90% of Spotify's costs. Not many options. They create a different revenue structure, like podcasts, or they have to run a much leaner operation. I don't know if they can actually make a profit with a much leaner operation.

  
• Reply 11 of 12

  cgWerks Posts: 2,952member

  February 1, 2023 1:13AM

  tht said:
  … They create a different revenue structure, like podcasts, or they have to run a much leaner operation. I don't know if they can actually make a profit with a much leaner operation.

  I think they thought they were going to create an ad-revenue machine by taking over podcasting. They paid a *lot* to bring some big ones as exclusives, and bought Anchor to try and get people to create new shows on the platform. The latter worked, but generated millions of ‘dead’ podcasts. The advertising didn’t work, I believe, because their listenership numbers are fairly low, besides a couple of the biggest shows. (It is speculated they had advertisers, but couldn’t deliver the ‘inventory’ of spots to place them.)
  
  Since they’ve kind of become the enemy of the podcast industry, I hope they fail, or at least go back to focusing on music.

  
• Reply 12 of 12

  anonconformist Posts: 199member

  February 1, 2023 3:02AM

  tht said:

  anonconformist said:

  There is also the issue that music is an IP commodity. It makes sense as a loss leader to get people to buy other goods and services, but you need to have profitable goods and services that fit, and it appears they’ve not found that yet.

  I think the typical plan is to become a monopolist aggregator for music streaming, to a point that the music industry relies on Spotify for money, and has no other options. If that happens, Spotify will squeeze the music labels for cheaper, more profitable, licensing terms.
  
  Paying licenses for music IP is like 90% of Spotify's costs. Not many options. They create a different revenue structure, like podcasts, or they have to run a much leaner operation. I don't know if they can actually make a profit with a much leaner operation.

  That wasn’t stated explicitly in the Netflix series, but was heavily alluded to as to how they could borrow another billion from a bank, that they had what was effectively a monopoly as of the 2025 timeframe, as while there were a number of other smaller streamers, none were anywhere near their size. As has been seen between smartphones and who has the high-end of the market (even with not the numbers-dominant platform for active users) only the biggest have any economies of scale with which to potentially make a profit: all the others (except for parts manufacturers, of which Samsung has a dual role) are fighting to reach the bottom and still survive, without much in-house innovation, because their profit margins are so thin they can’f reinvest, as they’re selling commodities. It’s a terrible business selling commodities unless perhaps nobody else sells the one you do.