Ouch. Net revenue margins at 2%. There's more top line margin in farming.
Makes me wonder if there isn't an antitrust case here somewhere. Feels highly predatory by music license holders.
Makes me wonder if there isn't an antitrust case here somewhere. Feels highly predatory by music license holders.
That doesn't mean that the content licenses aren't predatory, just that I don't see the relevance of that argument.
It's not obvious this is the case. If the record companies see Spotify increasing their revenue, they may just demand higher fees.
That's the crux of the problem here. Spotify need the record companies, but the record companies don't need Spotify. For now the record companies are squeezing Spotify for all their revenue, but it's no trouble to them if Spotify goes out of business. It's a tiny revenue stream for most of these companies.
I suspect Spotify knows this, and is betting on getting too big to fail before the record companies push them under.
Fundamentally, the service they offer is not particularly difficult to replicate. They take music and stream it to users, supported by either advertising or a monthly subscription.
They act as a middle man that the big three record labels could easily cut out, and at the same time these labels can effectively pull the plug on Spotify at their convenience.
Without the music library, Spotify is nothing.
Most of the overhead would seem to be royalties, so reducing them by 25% may not be an option. The revenue is also determined by ad market rates, which can be cyclical, and is out of their control.