Why Spotify Will Never Make Money

http://fortune.com/2018/05/03/spotify-earnings/

by wyclif • 8 years ago

1 1 8 years ago

utahcon• 8 years ago

The music industry has always been a horrible nasty beast in my eyes. In the days of radio, playing music on the radio was first seen as "advertising" for a new record. Record companies paid to get their music on the radio for people to hear, so they'd go out and buy a record.

Then people wanted to hear more music on the radio, because 1) it was free, and 2) they wanted to learn about more new music. Record companies pushed for full time music radio stations.

Then there was a turning in the streams... commercialization of the music radio stations. Hey, all the kids are listening to music, let's play an ad. The music industry was still selling record (more than ever before), but oh no, people were listening to ads, and radio stations weren't sharing that profit with the music industry!

The music industry starts charging royalties to radio stations for playing their music. You know, the music that served as ads to the records they were selling. As a result less and less music and more and more ads were being played on the radio.

Consumers began to dislike radio, and cassettes and optical discs were becoming easier to get in cars, and in portable forms. The music industry jumps on both band wagons and all but stops producing vinyl records, and makes cassettes and compact discs available for the every day Joe.

CD pricing surges in the late 90s as the music industry is starting to realize that they can't keep doing things the way they always have, because CDs and cassettes are too easy to copy. As a result they head out to start making the government say it isn't fair to copy your CD or tape and give it to a friend. It isn't legal to copy your CD to your computer. It isn't legal to share music track by track.

The music industry spends millions on stopping piracy (notably losing the war for many many many years).

Streamers enter the scene. Piracy all but stops. Kids are no longer downloading, and owning the music they listen to. Instead they are streaming the music, and the music companies demand royalties. Streamers introduce ads to keep the streams free to consumers. Some consumers want to pay for music, but want it on their terms. The music industry instead of helping streamers is now basically forcing them into losing money.

Yes, there are the big players like Google, Amazon, and Apple streaming music, and taking the loss because they are retaining customers. However, I don't think even that can last forever.

I predict another rise in piracy is on the horizon. These types of shenanigans are the reason for it, but they won't learn, they won't change. It will continue this way, in a cycle, forever.

Why Spotify Will Never Make Money

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