Curren$y the game spotify free#

Spotify’s cost structure is absolutely insane, because 70% of every dollar goes to rights holders, leaving 30% for Spotify’s operations and expenses, clearly leaving nothing for profit. Sounds melodramatic? Well let’s look at some numbers and see the major issue of how cash is divided in streaming music. Something’s gotta give, and I doubt it’ll be LA Reid, Metallica, and their friends. Spotify is being absolutely crushed by an entertainment industry who’s grasping at every tenth of a percent they can get for the 1% of artists that actually “make it.” Sure, the Internet is democratizing music distribution, but when you mix in the negotiating reality of the major entertainment labels and the RIAA, one of America’s most powerful lobbying groups, you have an in industry that’s crumbling at a glacial pace in the context of a tech company growing at a breakneck speed. Imagine the Government Levying a 70% Tax on Every Dollar You Made Yet, even though Spotify is estimated to balloon to almost a billion dollars in revenue this year, they face two seemingly insurmountable problems: the music industry and our generation's perception of music. This all sounds amazing, right? Any other SaaS company would kill for those kind of unit economics. That seems ok, but here’s where it all goes down hill

Curren$y the game spotify free#

Fortunately for Spotify their conversion numbers are pretty stellar with 25% (or 6 million) of free users converting to paid plans. Users can also pay to eliminate the ads for $4.99/month and then to eliminate the ads and stream music on any and all devices (even offline) for $9.99/month. Remember though, freemium is a marketing strategy, not a revenue model.įor revenue, Spotify’s free users can stream unlimited music on their desktop, but need to listen to ads every once in awhile, providing our Swedish bards with a small revenue stream (about 15% of their total revenue). We’ve all seen these before, but essentially an enormous bevy of free users are subsidized by a small proportion that end up paying for some sort of premium plan. Spotify’s marketing strategy hinges upon the freemium play. In order to truly unpack the problem, let's take a quick review of their business model. Freemium is only as good as the revenue model to back it up

Let’s explore Spotify’s revenue model a bit more, discover where the numbers show they’re failing miserably, before digging into where Spotify (and you) can turn these mistakes around because the last thing this music fanatic wants is to see Spotify go the way of the Dodo. That’s a big statement, but fortunately we can prove it with some good old fashioned evidence. Instead, Spotify is being crushed under their own weight by the makeup of their pricing and revenue model that is simple, but awful for their bottom line. Not even new competitive entrants like Google, Twitter, and Apple lead to Spotify failing. In fact, they’re actually playing directly into what we want in a music service. Yet, Spotify's current marathon is not hinged upon changing consumer’s behavior in mass like an Amazon. Hell, Amazon did billions of dollars in sales last year, and still came up with a loss.

Sure, tons of companies go into the red in defense of growth, even at the eight or nine figure mark. market seemed like a smashing success, but despite the significant growth, Spotify reported a net loss of $57 million due to $293 million in expenses. During 2011, digital music service Spotify doubled their paying customers to more than six million and earned a whopping $236 million.