How Spotify Can Become Profitable

journovampire writes: Spotify just posted another big net loss, but it can become profitable with some specific changes according to one analyst. He suggests the following three options: Cut royalty costs to the music industry, freeze expenditure year-on-year, and what seems like the least likely option, somehow make free users pay $1 every three months. He points out: "if Spotify’s current free user base just paid €1/£1/$1 every three months, it would be a profitable company."

Comments

It not very hard

[Anonymous Coward]

Add a nice new feature.
Charge $1 per month to use it (or $0.33, if that's all they need).
Profit.

Re:It not very hard

[viperidaenz]

You mean charge everyone $5 per month, because changing a free service to a paid one could well cut the user base by a factor of 15.

Re:It not very hard

[Noah Haders]

you know, you're right, but I think it's for the best. Spotify's current approach is unsustainable, not only for themselves but also for musicians, labels, and the music industry. we all shake our fists at music labels, but I for one want a thriving industry where musicians and labels make money so they're incentivized to make more music.

Re:It not very hard

[Anonymous Coward]

no, you goober.

charge only for the added feature, leave the rest alone.

reading comprehension.

Re:It not very hard

[rudy_wayne]

Add a nice new feature.
Charge $1 per month to use it (or $0.33, if that's all they need).
Profit.

How do you collect $1 a month from each user? The problem isn't so much that people don't want to pay. Most people wouldn't mind paying $1 a month, but will not pay $12 once a year. Yes, that makes no sense, since it's the same amount of money, but that's how people are.

So how do you charge people $1 a month? The real problem is that there is no easy, simple way to charge people a small amount of money.

Re: It not very hard

[Anonymous Coward]

That's easy. Just buy their albums. Now if only the industry would abandon the crazy import CD pricing I could patronize some great artists who's music I'd like to own a copy of.

Re:It not very hard

[jonsmirl]

I'm still trying to figure out how collecting royalties on songs where everyone is dead is going to incentivize them to make more music. Maybe we should reconsider these rules giving copyright to corporations for 200 years.

Re:It not very hard

[Anonymous Coward]

When/If they become profitable you can expect that royalties expected/due will go up also ;)

Re:It not very hard

[ColdWetDog]

Charge people $5 every 4 months (yes, the math is a bit different). Lots of things are paid by the quarter.

You do have a good point though, micro transactions have just never taken off and this would be a good use for it.

Re:It not very hard

[Anonymous Coward]

Charge people $5 every 4 months (yes, the math is a bit different). Lots of things are paid by the quarter.

Yes, the math must be a bit different if you think 4 months is a quarter of 12 months.

Re:It not very hard

[iamhassi]

Funny I just cancelled my spotify today because it required a program to be installed to work on PC and it didn't allow me to login using their facebook login thing. Why does it require a program? Should work on any browser like..... uh, pretty much everything, everything except big games.

Re:It not very hard

[Anonymous Coward]

Spotify does have a web-based player.

Re: It not very hard

[ciaran2014]

Musicians never got money from album sales. A sliver get allocated to them, and taken away again to repay the advance which the label gave them to make the album.

Buying concert tickets and merchandise, IIRC, is where they earn money.

Re:It not very hard

[brantondaveperson]

That's not completely true. Millions of people around the world paying small amounts of money for iOS apps shows that it can be done. Additionally, I signed up for a $1.29/month charge for an extra 20G of iCloud storage, and it was extremely easy.

If Apple can figure it out, why can't spotify? Or is the 'enter your credit card' details step the part that you indirectly refer to as difficult? If so, then sure, there's no easy way of charging people a small amount of money without requiring and storing credit card details. If you can get people's credit card details, then what's the problem?

Of course, once you've launched a free service - and rightly or wrongly people really do expect free stuff - it's rather hard to convert that into a 'pay' service without losing a large percentage of your user base.

Re:It not very hard

[Anonymous Coward]

In-app purchasing via Apple's iTunes Store points to a very easy way to go. You can even sign people up right in the app, using their iTunes credit cards - and you'd have access to potentially tens of millions of customers.

Of course, you have to pay Apple their 30% cut for all the services they provide for you - which means you'd have to raise your prices to a draconian $18 a year to make the same profit, but you outsource all of the difficult work of finding an easy, simple way to charge people a small amount of money each month.

So... why, exactly, is it so hard?

Re:It not very hard

[Wycliffe]

How do you collect $1 a month from each user? The problem isn't so much that people don't want to pay. Most people wouldn't mind paying $1 a month, but will not pay $12 once a year.

Unfortunately without microtransactions, the next best way to extract small sums of money is with advertisements.
The best way to get $1 every 3 months from the casual user is to throw in the occasional ad.
It doesn't take very many ads to generate $0.33 per user and then charge people $12 a year to remove the ads.

Re: It not very hard

[schnell]

Musicians never got money from album sales. A sliver get allocated to them, and taken away again to repay the advance which the label gave them to make the album.

It entirely depends on the band, their contract, and how much they sell. The Beatles made massive piles of money even though they stopped touring halfway through their career, and the Pink Floyd "The Wall" album saved the band's members from bankruptcy while the following tour lost them all money. You can read about the structure of traditional music industry royalties here.

The short version is that on a CD sale, artists might make a 10% royalty after packaging, breakage, marketing and costs of production (advance) are subtracted. The above linked article shows how quickly that 10% shrinks, as well. Digital play royalties - unless the band is savvy and has negotiated better rates - are about half of the CD rate.

However, if you wrote the song that was performed, you will see an additional cut. And the band also gets royalties each time the song is played on the radio, or used on TV or in the movies (the writer gets an even bigger cut). So ultimately, there is still a lot of money to be made in recorded music, not just concerts and merchandise... but your music has to be popular enough to appear on the radio or other media for you to cash in. For indie bands, concerts and merchandise will be the big moneymakers of course, but they never sold much recorded music anyway.

Re:It not very hard

[Anonymous Coward]

https://play.spotify.com/

Re:It not very hard

[jklovanc]

Here are a couple of points;
1. Many musicians have families and work to create an inheritance for them. If there is no copyright past death there is no inheritance.
2. Music corporations are not going to pour millions into a rising star if they can get no return if the artist dies.

giving copyright to corporations for 200 years.

Bye the way, The limits are death of artist + 70 years or 120 years from date of creation for works for hire. Where does the 200 years come from? I haven't seen an artist live for 130 years after copyrighting a work.

Re:It not very hard

[PopeRatzo]

1. Many musicians have families and work to create an inheritance for them. If there is no copyright past death there is no inheritance.

So, when I die, can I still have the company I work for continue to pay my family for the work I did when I was alive?

Copyright laws that extend beyond the death of the artist are an abomination.

2. Music corporations are not going to pour millions into a rising star if they can get no return if the artist dies.

If "music corporations" stop pouring "millions" into a rising star, nothing of value will be lost. It doesn't cost "millions" to make and release a recording any more. Those days are long gone.

Re:It not very hard

[PopeRatzo]

Or is the 'enter your credit card' details step the part that you indirectly refer to as difficult?

I pay for Spotify through PayPal. Spotify doesn't get my credit card numbers.

Re:It not very hard

[Antique Geekmeister]

> Millions of people around the world paying small amounts of money for iOS apps

Mostly, it shows that it can't be done. Most of them go bankrupt as soon as they try to scale beyond a few intrigued users.

Re:It not very hard

[jonsmirl]

120 years, 200 years does it matter? Nothing is going to come out from under copyright until we're all dead.

I am a strong advocate of 20 year automatic copyright, then allowing the purchase of 20 year extensions for escalating renewal fees. Years 20-40 could be $1000 and then 10x for each successive renewal. This simple change would completely fix the orphan work problem and put millions of less popular works into the public domain. But the copyright industry doesn't want that to happen - they don't want these less popular works flooding the market for free.

Re:It not very hard

[bemymonkey]

$5 per month would be perfect, IMHO. Worth getting rid of the ads...

10€ on the other hand (there's no half-price student package here in Germany) is too much - I have a huge music collection that I'm still actively adding to, so theoretically I don't actually *need* Spotify, especially at home. Sure, I could afford 10€ a month, but I'd prefer to spend that on extra beer...

Re:It not very hard

[Anonymous Coward]

> You mean charge everyone $5 per month, because changing a free service to a paid one could well cut the user base by a factor of 15.

I suggest they make those cards with credits like some games online and Google Play Store. They keep doing things for free but if it's on the supermarket I might give it a go. They get the money, I get my privacy. I don't want even to download music that requires registering. Just offer some advantages so that I can believe I'm getting something and I'll understand I'm contributing to keep them alive (last.fm, that is, but if spotify makes money from them it's ok by me).

BTW, I run Linux. No Windows apps, please. I don't buy them out of anger.

Re:It not very hard

[Anonymous Coward]

" login using their facebook login thing"

  Pretty much says it all

Re:It not very hard

[Anonymous Coward]

I'd like to see a 30 year copyright term with no renewal. Perhaps 70 years for written works.

Also, I'd like to see it decriminalized after 10 years provided it's not for commercial-level infringement.

Re:It not very hard

[Anonymous Coward]

what does it says? the only thing I read on it that you are a whiny idiot, and not everyone is technical?

Re:It not very hard

[Anonymous Coward]

You have been able to buy spotify credits in Swedish stores for quite some time.

Also, Spotify on Linux works, see https://www.spotify.com/se/download/previews/ .

Overall, Spotify seems to be a company that is trying to do the right thing. For example, they published an API to allow independent developers to write Spotify clients. (For example, there was a Spotify plugin for XBMC available some time ago, even though it didn't work so well a couple of years ago, I haven't tested it for a while.)

Re:It not very hard

[gl4ss]

if userbase goes down, then the costs go down as well.

the real problem is that the ADS are not paying spotify enough to cover the plays of the free users. however, I suspect the calculation is such that the free users would need to pay 0.33 dollars / month and still have to listen to ads.

that would make the ads have more worth though, they could charge more per ad.

the real problem for them in that is that people would just rather listen to the music from youtube than pay 0.33$ / month - just like they're already doing in markets that don't have spotify. seriously, youtube is the rdio/spotify/itunes whatever of the south east asian market already. it's free and has more obscure but popular stuff(obscure in the sense that if anything is popular locally anywhere, it's on youtube. but not on spotify)

Re:It not very hard

[Anonymous Coward]

If "music corporations" stop pouring "millions" into a rising star, nothing of value will be lost. It doesn't cost "millions" to make and release a recording any more. Those days are long gone.

If Justin Bieber and the current crop of "rising stars" are any indication of the mindset and ability of the music industry to cultivate "talent", the corporate music industry should be outlawed. There is plenty of good musicianship available for listening and you can support the bands directly.

Re:It not very hard

[N1AK]

$5 per month would be perfect, IMHO. Worth getting rid of the ads...

Free without ads would be 'perfect' but it doesn't mean it is a viable business model.

If they roughly half the cost, then they would need to more than double the number of paying customers just to stay where they are. I'm sure if they thought they could make more money by lowering the price they would.

Re:It not very hard

[bemymonkey]

I can't help but wonder how many others there are like me though. If there's a ton, dropping the free w/ ads tier and setting the premium price to $5/5€ would probably quadruple the number of subscribers over night... It's the carrot and the stick :p

Re:It not very hard

[gnupun]

So, when I die, can I still have the company I work for continue to pay my family for the work I did when I was alive?

Sure, is your work copyrighted and do you own the rights to your work (i.e. not sold to employer in a work-for-hire contract)?

Copyright laws that extend beyond the death of the artist are an abomination.

When you eat a meal at a restaurant, it stops providing benefit to you or anyone once you've consumed the meal. OTOH, a copyrighted work keeps providing benefits to its users for many years or decades, long after its creation. Therefore, copyright should be for infinite years and that's the right thing to do. So if you were reading a Charles Dickens novel today, what argument do you have that Dickens' descendents should not financially profit from your enjoyment of the book?

Limited copyright times were designed to (illegally) limit the amount of wealth earned by copyright holders (usually creators of copyrighted material in the days when copyright law was first formed). Nowadays, creators don't hold copyright to their own works. Instead it is owned by their employers, who in turn push politicians to extend copyright years. The way it works is, if creators own copyrights, the laws are tweaked to reduce copyright years. But if capitalists own the copyright, the laws are tweaked to extend copyright years.

Re:It not very hard

[oobayly]

Maybe it's a UK thing, but I can sign up a new account without a facebook account.

Re:It not very hard

[greenfruitsalad]

i really agree with the 1st point. i'm not a fan of the 2nd but it's true.

my wife's father was a composer, conductor and a music professor who married very late in his life. last 10 years of his life were pretty much so his wife and daughter can be supported by royalties from his work after his death. while the yearly cheques don't bring any breathtaking sum (it's mostly classical and jazz music), it was enough to make sure his wife could stay at home to bring up his daughter and enough to put his daughter through university and good quality private schools.

had there been no post mortem royalties, he would probably not have composed half of his best works and taught instead.

Re:It not very hard

[pz]

Copyright laws that extend beyond the death of the artist are an abomination.

Generally, I would agree if you were to amend your statement to include "beyond the death of the artist and the age of majority for their children." If you had, for example, an artist in their 20s or 30s with young kids who died accidentally, it would make sense to use the artist's posthumous earnings to complete the financial obligation he had to his children.

I have a friend under exactly that circumstance. Her spouse died accidentally shortly after their twin daughters were born. His royalties continue to pay for his daughters' upbringing, as is right and just.

Re:It not very hard

[JustOK]

don't forget to add in the expenses of getting that money

Re: It not very hard

[ciaran2014]

The Beatles and Pink Floyd are extreme examples from the top 1% of the music industry, and neither are even active in today's music industry.

It's like arguing that the lotto is a good way to become rich because Mr. X won the lotto in 1981, and Ms. Y won it in 1994.

Re:It not very hard

[Anonymous Coward]

You can also generate a per device username/password to use in lieu of the facebook login, even for accounts that were set up via facebook login. That's what I use for my office pc.

Re:It not very hard

[PopeRatzo]

So if you were reading a Charles Dickens novel today, what argument do you have that Dickens' descendents should not financially profit from your enjoyment of the book?

The fact that those descendants had absolutely nothing to do with creating the book?

Limited copyright times were designed to (illegally) limit the amount of wealth earned by copyright holders

You have that exactly backwards. Copyright is not some natural right. Copyright is entirely a creation of government. It does not exist in nature. It was put in place to protect and encourage innovation, because innovation is good for society. Now, there was plenty innovation before there was copyright, but OK, we want to make sure the innovators are rewarded. That doesn't mean their great great great grandkids are rewarded. Works need to enter the public domain at some point.

Today, people can play the works of J.S. Bach without having to pay royalties to the family. That's good for everyone.

Re:It not very hard

[Dragonslicer]

1. Many musicians have families and work to create an inheritance for them. If there is no copyright past death there is no inheritance.

So, when I die, can I still have the company I work for continue to pay my family for the work I did when I was alive?

Copyright laws that extend beyond the death of the artist are an abomination.

No, but the money that you were already paid does go to your family. Your company will also pay your family for your unused vacation time (at least this is true when you leave or are fired, so I assume it's true if you die unexpectedly). The term is "deferred compensation", and that's what royalties are.

Copyright terms that automatically expire at the death of the artist are what would be completely unfair. In addition to the danger of a young artist dying unexpectedly, as another poster described above, it would provide reduced incentive for older artists to continue producing works. A fair copyright term would be a fixed length, completely regardless of what happens to the creator. Otherwise, the monetary value of the work is directly dependent on the age, health, and, to some extent, luck of the creator.

Re:It not very hard

[Anonymous Coward]

Lets rephrase it to reality.
People should be jailed and beaten and violence foisted upon them to give a state issued monopoly to certain peoples ideas long after they are dead and gone for no reason other than enriching their children.

Really?
No. I disagree. A state issued and sanctioned protection should be for a limited time for its intended purpose:
To promote the arts by giving writers a limited monopoly on ideas for a time to earn a living.

Re:It not very hard

[ari_j]

I thought their current business model was to charge everyone $5 per month, including non-subscribers. At least that's what my credit card statement and numerous online forum posts seem to indicate. Their customer service apparently also sucks, as they refuse to answer when you e-mail or call to discuss the fraudulent charges. They could probably become more profitable if they started earning money instead of stealing it.

Re:It not very hard

[gnupun]

The fact that those descendants had absolutely nothing to do with creating the book?

Neither did the descendents who inherited their parents' farms, mansions, condos, hotels, businesses, savings accounts, investments, expensive cars etc. So just like out-of-copyright books, I want all those assets freely distributed to everyone in the country, equally, upon death of the owner.

Copyright is not some natural right.

That's backwards. Copyright is just a legal embodiment of what is natural right -- creator of intellectual property is (the first) owner of that property. It would exist in some other form even without the government.

because innovation is good for society.

Sure... but where does it say free innovation? If you want to enjoy that innovation, you gotta pay.

Today, people can play the works of J.S. Bach without having to pay royalties to the family. That's good for everyone.

That's great for musicians who have no composing skills. They can simply play Bach's music without paying royalty to the Bach family and then sell copyrighted CDs for $12.99 to $19.99 to the public.

Re: It not very hard

[omnichad]

For an argument that's valid today - a band that does its own marketing can completely rid themselves of their label now. They can sell physical CD's on-demand via Amazon CreateSpace, digital MP3 via iTunes/Amazon, streaming via Spotify/Pandora. They can book their own live gigs. And none of that requires a record label. And more and more independent artists are doing just that and making a decent living with far less success than is required with a label taking a cut. And fans are more empowered than ever to fund the art they want with things like Kickstarter.

Re:It not very hard

[omnichad]

So, when I die, can I still have the company I work for continue to pay my family for the work I did when I was alive?

Have you heard of Social Security? It's like that, but for rich people.

Re:It not very hard

[omnichad]

Most people wouldn't mind paying $1 a month, but will not pay $12 once a year. Yes, that makes no sense, since it's the same amount of money, but that's how people are.

And I could pay my mortgage in an annual payment 12x what I normally pay. It's the same amount of money. Good budgeting is just simpler if everything is in monthly installments. I hate that my local city only charges utilities once every 2 months. I budget my car insurance by putting $x aside each month into a special account so that I don't have to pay in a lump sum.

How do you collect $1/mo. per user? The fees for individual transactions are mostly percentage-based anyway - especially if you're doing any high volume. Require a debit card or ACH where the fees are lower if you have to. Or charge $1.15/mo. if you want monthly and anyone who wants it monthly will probably pay that extra bit.

Re:It not very hard

[omnichad]

Wait...so you trust Paypal more than...anyone? I suppose it's not so bad if you're paying with it as opposed to accepting payments through them, but they're far from innocent.

Re: It not very hard

[Anonymous Coward]

You're insane. First, there's inheritance tax to deal with other assets. Second, those are hard assets, they exist and are passed as real property. Third, there is no natural law to copyright or other intellectual property rights for a simple reason: when you create a song, or a process, or an invention, and you share it, you still have the "idea" and now I have the idea too! Under your ridiculous proposition we would all be paying to use fire, the wheel, flint, and any IP derived from it. You're either truly stupid, or your a troll.

Re:It not very hard

[Anonymous Coward]

I wouldn't mind paying $1 or $5 a month to listen to music. There is however no way in hell I would trust any company in the music industry with my credit card information nor would I expect any money being paid to them to go to the artist.

Re:It not very hard

[bluefoxlucid]

Imagine if they just charged $1/year for premium.

Re:It not very hard

[bluefoxlucid]

Jefferson said inheritance was unnatural; but Jefferson was a hyper-liberal ass leaning toward Social Democrat. He believed a man's death should mark the right of the state to take all his stuff. All. Some much more moderate folks (FDR, who was also supremely liberal, but nowhere near Jefferson's game) proposed we take a percentage as inheritance (the Death Tax or Estate Tax), and an increasingly large percentage as the size of the estate grew.

In any case, I think the inheritance thing is a sham argument. What is inheritance, but a windfall when you are old and secure? What is inheritance but a thing cut up across three generations spreading wide, a paltry sum distributed among many? Inheritance won't provide secure income, except in that you inherit a rather large business such as Ford.

Re:It not very hard

[bluefoxlucid]

Works entering the public domain provide an economic benefit to future generations. Copyright is an economic negative: it costs us in wealth, making us poorer; it provides, however, a window of opportunity to make a profit from new works, and is thus justified in its cost. When you expand that window of opportunity such as to build an empire rather than to make profit, you are abusing the mechanism and bringing economic damage, weakening culture and destroying wealth.

Re:It not very hard

[bluefoxlucid]

Farms and other businesses have great upkeep costs which must be exceeded by their useful output in order to turn a profit. All investments collapse; hard assets do not draw upon the economy to divert wealth, but rather maintain or decay in wealth. All of these things either bring no cost to society or provide a continuing useful output; by contrast, music, movies, and books exist, and can be copied--the service of copying creates a good, while the fact of existing creates nothing.

A farmer who holds but does not work the land will make no profit; a copyright holder who holds ownership of a piece of music may make profit, for when another entity invests its own resources to produce a copy of that work, the copyright holder claims he must be paid for... nothing, just for the fact of being who he is. It is as if the farmer, content with who he is and lazy in his way, farmed no tomatoes, but instead charged every other farmer on the planet for growing and selling tomatoes.

Re:It not very hard

[bluefoxlucid]

Social security will be simultaneously eliminated and expanded. I have written these plans and I will see them done so that we may all be the more wealthy.

Re: It not very hard

[gnupun]

No, greedy moron, I'm not talking about patentable IP (creating fire, wheels etc.) but copyrightable IP (paintings, music, books, movies etc.). Copyrighted IP can passed down to generations like the so-called real assets without causing hardship to people trying to use technology like wheel or fire. I call them "so-called real," because they are a mixture of cheap minerals from earth combined with expensive, patentable and copyrighted IP to form your so-called real assets.

when you create a song, or a process, or an invention, and you share it, you still have the "idea" and now I have the idea too!

Exactly why IP laws exist... to prevent you from profiting from that invention, that song, without paying the creator. Because I did the work to create something useful and you... simply copied/took it without giving anything in return.

Re: It not very hard

[gnupun]

BTW, you still haven't answered what the descendents of the "real property" did to take ownership of it after the death of the property's owner.

Re:It not very hard

[PopeRatzo]

it would provide reduced incentive for older artists to continue producing works

So, without copyright protection Beethoven would never have produced his Late Quartets?

Please. If you want government to subsidize artists, then let them subsidize artists. Creating laws only to create eternal income streams for artists and never allowing their work to enter the public domain is dishonest and counter-productive. It hurts culture and ultimately hurts artists.

I say this as someone whose income is dependent on my intellectual property.

Re:It not very hard

[PopeRatzo]

Wait...so you trust Paypal more than...anyone?

No, but by using PayPal, I limit my exposure to one point, instead of giving my credit card info to every service I use. Steam, Spotify, etc all get paid through PayPal.

I realize PayPal isn't innocent, but at least it's not Apple Pay.

Re:It not very hard

[gnupun]

Farms and other businesses have great upkeep costs which must be exceeded by their useful output in order to turn a profit.

But there are plenty of efficient farmers and businessmen who are more capable of maintaining these real properties than the (often inexperienced) descendents of the previous owner. So, why pass these properties down to the descendents?

hard assets do not draw upon the economy to divert wealth, but rather maintain or decay in wealth.

Copyrighted works too maintain and decay in wealth generation after their prime years. So, not very different. Yet it is redistributed.

It is as if the farmer, content with who he is and lazy in his way, farmed no tomatoes, but instead charged every other farmer on the planet for growing and selling tomatoes.

Why not? If you used his land to grow the tomatoes, you owe him a cut of your sales/profit. Similarly, if you repackage someone's copyrighted song and sell it on CD or as a network service, you owe the owners of the copyrighted material, a cut.

What does a farmer do anyway? Mostly work on the land driving around in a tractor while planting seeds. Then using another tractor like vehicle to reap the finished crop -- mostly automated. It's very similar to a copyright material owner opening a business, advertising his product, then packaging and shipping it to a customer -- both products involve simple, menial tasks. The farmer is lazy because earth and nature do most of the work in growing the crop. This is similar to the laziness of the descendent who continues selling his ancestor's copyrighted content or the laziness of a pirate who thinks he has the right to copyrighted content without payment just because he can run a copy command on his file manager.

Re:It not very hard

[omnichad]

You also lose the ability to easily do a standard chargeback since you're dealing with a middleman for your payments.

Re:It not very hard

[gnupun]

Works entering the public domain provide an economic benefit to future generations.

Beethoven, Bach, Mozart, Dickens works have been public domain for quite some time. What economic benefits have been gained so far? Nothing, other than getting those works for free.

weakening culture and destroying wealth.

I fail to see how paying for art weakens culture. It should strengthen it instead. As far as destroying wealth, no one became poor spending a few hundred dollars a year.

Re: It not very hard

[AvitarX]

And playlists. My friend was using YouTube playlists when she hosted parties before Spotify was a thing.

I think if Spotify wants to succeed they need to find a way to entice more subscriptions, which unfortunately means lamer service.

Maybe an ad free version that works like the free one without ads (still not mobile playlists or caching ). I don't know.,I paid for the full service until it looked like they'd never support Chromecast and moved to Google play. After some time using it, I find google play better at recommending too now.,so I win. Better recommendations (in I feel lucky radio, the brows able ones suck), better interface (I think Spotify has a library style feature now too though),a nd side load what's missing.

Re:It not very hard

[bluefoxlucid]

there are plenty of efficient farmers and businessmen who are more capable of maintaining these real properties than the (often inexperienced) descendents of the previous owner. So, why pass these properties down to the descendents?

A farmer may work a farm or sell the land, depending on if he is skilled enough to turn profitable output from the land. In the same way, a musician may play his instruments or sell them on eBay.

Copyrighted works too maintain and decay in wealth generation after their prime years. So, not very different. Yet it is redistributed.

Ah, but a copyrighted work can be altered, performed, incorporated, built upon. It can be used as a limitless foundation for new works. In this it is not consumed as land or metal, but multiplied and expanded as knowledge; for the exercise of earth and steel leaves you with less of each, but the exercise of knowledge and creativity creates more of these things.

To constrict the sale of earth and steel is to deny yourself the profit from it, while to sell said earth and steel is to deny yourself the possession of it; but to constrict the sale of knowledge and creativity is to deny others the profit from it, while to release said knowledge and creativity is to provide yourself the profit of future knowledge and creativity based upon that foundation.

What differentiates these is that constricting the sale of knowledge and creativity is what provides you monetary profit, while foregoing that monetary profit provides society a profit which you may share in, and so you are left at a decision, and the monetary decision is more concrete and understandable. As an individual, you may very well want extensive copyright terms; but as a society, you will want shorter copyright terms so that you, too, may profit off the works of others, enhancing them and reselling them. Such profit is greater, but less guaranteed, and so is risky and frightening in comparison to the less-profitable hoarding strategy; yet the hoarding strategy fails when pop culture shifts--an uncontrollable and terrifying beast--and, yet again, provides delayed returns when pop culture shifts later to a retrospective taste.

One may surmise, then, that the true dilemma is between an attempt at profit on retrospective pop culture--a sudden resurgence of interest in things long-since past their profitability suddenly gained new profitability--or an attempt at profit on compounding creativity--that the old, which may become again interesting, be released anyway, and incorporated into the new if interest in the old resurfaces, demanding more work yet providing a profit opportunity to the markets seeking both old and new. The second form is, from a societal standpoint, more profitable: while one entity may profit from a hoarded work, that work will provide a basis for many other entities if that work is freed; likewise, that one entity may or may not find a niche in the new market, and thus build upon many freed works to profit from opportunities he may otherwise miss. In any case, the new market will expand all of these freed works which are now interesting again across many creative entities, thus producing more than in a hoarding market, and thus giving more to society as a whole.

You can see the difficulty, the conflicting drivers, and the reasoning which makes people believe firmly in a hoarding strategy as the best means of personal profit: what one has made once, one believes should belong to him for all time, and thus should deny to others that they may build upon if he is not the chief recipient of its profits. This is more concrete than that one may make great profit by continuing effort, as one will ignore the efforts of others to build upon his works, questioning why they should be allowed to profit from his effort, yet complaining that he must now put out similar effort to them to mold the prior efforts of another into a profitable form for himself--questioning why they are allowed to do w

Re:It not very hard

[lactose99]

Works entering the public domain provide an economic benefit to future generations.

Beethoven, Bach, Mozart, Dickens works have been public domain for quite some time. What economic benefits have been gained so far? Nothing, other than getting those works for free.

Bullshit, people have been sampling and remixing public domain works for years and have created new works of value. To say the public domain has no economic benefit for new creators is terribly short-sighted.

Re:It not very hard

[gnupun]

sampling and remixing public domain works

The majority of such works are inconsequential since such things are done mostly by less creative artists.

Re:It not very hard

[bluefoxlucid]

Beethoven, Bach, Mozart, Dickens works have been public domain for quite some time. What economic benefits have been gained so far? Nothing, other than getting those works for free.

And having received these for free, others now have money with which to buy other, similar, newer works, fueling the great machine of creativity, yes?

Or we could use the creative argument that Wagner is in public domain, and now others have created works upon works.

I fail to see how paying for art weakens culture.

It makes a good which one may duplicate by his own effort into a good which one is not allowed to, creating an artificial scarcity, a constriction, and a high barrier to committing certain profitable acts. Consider that the great realm of fan fiction, fan games, and fan art add much to our culture--sometimes good artwork, sometimes practice to encourage and develop a new artist who would otherwise be lost to unmotivation--but are also horribly illegal.

At the same time, the artificial scarcity, as a temporary being, provides an incentive to produce such works. Researchers are paid to continuously research, to create new knowledge, which has many applications, most of which are expensive to commercialize, or which may improve an existing commercial product in a highly non-fungible way; creative works, of course, have no such strength, as they are inherently useless and replaceable, transient at best, and all despite their value to society. Society wants these things for free because it cannot profit greatly from them, and so a chain must temporarily be wrought unto these things so as to command stimulating tithe.

As far as destroying wealth, no one became poor spending a few hundred dollars a year.

Wealth is not money; wealth is productivity. Wealth is not that many dollars exist, but that those dollars can make many things. In a time when 1 million people have collectively 10,000 million dollars and can buy a house with poor insulation requiring 200,000 BTU of heat per month, there is half as much wealth as in a later time when 1 million people have collectively 10,000 million dollars and can buy a house with good insulation requiring 50,000 BTU of heat per month. In this later time, people have invented power tools and advanced building methods: less human labor is required to build a house, and the house is more sturdy, and less drafty, and better insulated, and so it is a better house with more materials invested, and costs the same, and requires less to upkeep.

In reality, population changes, money changes, and wealth changes. This makes such things difficult to understand: in the later time, you would have 2 million people collectively owning 40,000 million dollars, and proposing that there is twice as much wealth would be confusing and difficult. What stands out is that 2/5 of the total money originally was spent on housing, and that 2/5 of the new money is spent on housing, and yet that 2/5 purchases more: if there is twice as much money, more than twice as much housing--not just twice as many houses, or twice as much square footage, but also housing of better construction quality, of better sturdiness and insulation--is purchased without spending more than twice the original raw amount of money.

Society would gain wealth as well if ten times as much creative work were put out each year: our wealth of art, of culture, the thing that made the ancient Greeks so wealthy, would be enormous. To do so, of course, we would need monetary demand for that art: the sculptures and architecture of Greece were things of trade, drawing much income to the nation in times of old. This doesn't mean we wouldn't become more wealthy if art was produced to no profit; we would become greatly more wealthy if everyone did the same work in half as much time, receiving twic

Re: It not very hard

[ciaran2014]

But lone examples, or a dozen or a hundred bands being able to afford mansions doesn't mean that an industry supports musicians.

The majority get almost nothing. Most give up early. Others struggle on a low income until their talent fades somewhat and then they give up.

If I said something was impossible, then a lone example would suffice to prove me wrong, but I'm not saying it's impossible to make money from selling CDs. I'm saying it's rare in the current system.

Re: It not very hard

[omnichad]

Most don't need to get rich to be happy. For some, struggling with low income doing what they love is better than holding a regular job.

But really, it's like starting any small business. A large number of them fail. And you have to be entering a market that has room for you. It's about making a living and not getting rich or famous.

Re: It not very hard

[ciaran2014]

They mightn't be in it for the money, but fair is fair. There's a lot of money in the music industry, but way too much is going into marketing a small selection of CDs and funding a showcase lifestyle for a small number of musicians. There must be a model that creates fewer millionaires but gives more musicians a sufficient wage so they don't give up or end up broke and washed up by 40.

Re:It not very hard

[viperidaenz]

If it's a fraudulent charge, contact your card issuer to reverse the charge.

If they get enough of them, their processing fees will increase. If they keep getting more, visa/mastercard/etc will refuse to do business with them.

Re:It not very hard

[Anonymous Coward]

Thanks for the info and the consideration to comment on my suggestion.

I live in Brazil and maybe some sort of Android app could do the same role as plastic cards for credits; over here there are services one can subscribe to purchase credits on an automatic basis, much like prepaid phone credits. My phone internet (which is lousy) works that way.

I checked your link and it's seemingly in Swedish! (därför == therefore... ha!) Nice to have an alternative service which tries to treat clients better, for a change. I'm fed up with being treated as a pirate by traditional labels...

Re:It not very hard

[Stuarticus]

If you get paid in shares, then yes, absolutely. That's what's making the new American aristocracy, fortunately like good serfs they are so keen to join it they won't speak out against it.

The same way everyone else does...

[Anonymous Coward]

they must have some personal data about their users that they can sell to marketers and government, no???

Re:The same way everyone else does...

[viperidaenz]

I didn't think the government bought data. I thought they demanded it.

Re: The same way everyone else does...

[Anonymous Coward]

The government pays companies to collect for them, part of the system.

See also sales taxes.

The bigger you are, the more you're fawned over.

Re:The same way everyone else does...

[Anonymous Coward]

But they should buy it, not demand it.

If they demand it, it's unconstitutional. It's not unconstitutional if they buy it from someone else who's collecting it for other purposes as well, that way the Gov is not doing the unreasonable search and seizure stuff - the other 3rd party is doing it AND not on the Gov's orders.

See how it works? Outsourcing towards the smaller Gov the US People keep asking for...

Who Cares?

[sexconker]

If investors have been dumb enough to prop up the company for this long without seeing any sort of profit (and instead, big fat losses) why should I be worried about whether or not it can turn the tables? The worst that can happen is the service gradually winding down before the name is sold off to some other schlubs who will either:

A - repeat the mistake and run their own version of it at a loss
B - change some shit and run their own, slightly worse (for users) version of it at a mild profit
C - change a lot of shit and kill it in the same way Napster was killed
D - sit on it and do nothing

In A and B, users win.
In C and D, users lose until a new copycat (or 5) come along and get the same idiot investors to buy in and keep it running for free (to users) and at a loss (to investors) for years to come.

Re:Who Cares?

[Anonymous Coward]

E - slap a X amount per month subscription fee (which actually generates profit)

Re:Who Cares?

[Apotekaren]

Who are the investors in this company? Oh yes, the record industry. They keep making money from the high royalty costs, and can at the same time point at the Spotify bottom line and say "look, streaming isn't profitable, we have to go back to the good ol' business model of sales and DRM, THINK OF THE MUSICIANS!"

It's great when you have contracts with your musicians which enable you to have your cake, eat it, and then claim a part of their cake too to cover expenses of your cake eating.

If...

[Anonymous Coward]

If everybody in my country gave me just five cents per year, I'd be rich. What does that prove?

Re:If...

[Anonymous Coward]

What does that prove?

That you don't live in the Vatican city. ;-)

"Cut royalty costs to the music industry,"

[Anonymous Coward]

And that's a non-starter right there.

$1 a month

[Tyrannosaur]

it sounds cheap and easy for people to pay $1 a month, but personally there is a large bump in commitment as soon as I submit my monetary information. This often keeps me from doing still fairly inexpensive things because I don't want that commitment

Re:$1 a month

[Anonymous Coward]

$1 every 3 months. You have commitment issues over $4?

Re:$1 a month

[jopsen]

$1 every 3 months. You have commitment issues over $4?

There is something about recurring expenses... that people don't like...
Now if they decided only to sell it as $50 and then you get spotify for 10 years... with no binding or recurring expenses people might bite :)


Note, I pay for spotify, but I bought it in Denmark even though it's $20/mo, because the European selection is much better than the US selection (I live in US).

Re: $1 a month

[Anonymous Coward]

Heck, we have the technology to allow people to pay when and how they like. Do it like the humble bundles and get people to pay what they want, they are losing money anyway.

Re:$1 a month

[Anonymous Coward]

I'd have issues giving over my credit card information so they can charge recurrently. With such low margins, I'd be hesitant to assume they have quality security practices. I tried to sign up for a free account a couple of days ago to try it out, and the form was broken. The submit button did nothing. Instant loss of confidence right there.

Re:$1 a month

[Anonymous Coward]

Actually Spotify is one of the very few music streaming services that will let you pay month-by-month using only gift cards, never supplying them with any means to proactively bill you.

Pandora and SiriusXM both sell gift cards but will not let you use them until after you have given them a credit card number so they can continue billing you after the gift card amount runs out.

Their support for non-recurring billing made me seriously consider subscribing to Spotify, but their prepared playlists need some improvement (among other things they really need to run longer than 12 CDs before repeating) to offer value for my money.

Re:$1 a month

[bloodhawk]

Recurring expenses don't bother me. Trusting a company like Spotify to handle them securely and professionally however does. To many of these companies consider secure handling of your details as something that is distant second in importance to actually getting your money. Recurring payments mean long term trust, I simply don't have that in such a company.

Re:$1 a month

[ewibble]

My commitment issue is giving out credit card info, I don't by free stuff of sites want my credit card information, to make the purchase either.

Re:$1 a month

[Technician]

The endless list of horror stories of subscription cancellation woes has built up a very real online resistance to signing up for anything with a credit card. Even free as they often are a hidden free trial.

Having had the honor of first hand dealing with online ordering without just as easy online cancellation, has firmly entrenched the once burned twice shy response.

I can name names to be specific.

AOL, Comcast, Viatalk...

Until the industry fixes the locked in reoccuring billing subscription, all sign up proceedures no matter how small are potential fights in the future to cancell, and customers are burnt out dealing with it.

Guilt by association appplies to any service without a contract expiration date.

For spotify to leave the reputation, they should offer term subscriptions. 1 month, 3 month, & 1 year. No questions termination at end of contract. Then provide excellent service so I'll renew because they are great.

Re:$1 a month

[Anonymous Coward]

The actual amount is too small for me to care about, but the indirect costs of handing over my credit card number and personal details (required to pay the negligible amount) are a sticking point. If they had an anonymous way to pay with bitcoins or something I would be more likely to bother.

Re:$1 a month

[Anonymous Coward]

Hey, what's one more cut when you're dying of a thousand, right?

Re:$1 a month

[Tyrannosaur]

this is what I was talking about. It isn't even the direct cost that bugs me, just the fact that I am handing out sensitive information

Re: $1 a month

[AvitarX]

I'm pretty sure PayPal has a manage subscriptions tab that lets you kill any subscription you want.

Re:$1 a month

[Anonymous Coward]

I got offered three free premium months when I bought a new cell phone. I turned it down.

Re: $1 a month

[Technician]

Have you ever tried to work with their customer service over a dispute?

Re:$1 a month

[Anonymous Coward]

Think about tracking. a mobile number is great, but a credit card number is even more unique to you ... you may sell your phone (with SIM), as many people do. but who sells his CC number? ;)

Re: $1 a month

[AvitarX]

No, I've cancelled subscriptions through them and it wasn't an issue that needed me too.

I would pay $1 a month

[ZeroNullVoid]

I would pay $1 a month to upgrade my account. The $11 is too much. I would prefer just keep Netflix streaming and listen to background music and dialog. I did the 3 month thing or 99 cents the time before last that it was offered, but they only allow you to do that once. My option was to create another account and pay the 99 cents or just continue as a free user. I choose to stay a free user, as it doesn't really bother me. To me, it just says they pushed away a potential paying member, who is not willing to pay the price they are asking, but would be willing to pay another price. If spotify gets rid of the free tier, I would leave it. Even if I were a premium paying member.

Re:I would pay $1 a month

[Anonymous Coward]

I am the sucker who pays $9.99 a month and uses it for only a couple hours a month, but what is import to me is selecting my own songs rather than raidio mode. Maybe iTunes would be a better model for me. However if they did a tiered service based on hours of usage, I would be happy.

Re:I would pay $1 a month

[iMadeGhostzilla]

And that's the problem with services like this. You don't really need that much music. 50 years ago people heard songs on the radio from time to time and were happy. I have enough good music stored on my HDD (most of it ripped off of CDs I bought) that I don't really need more.

Re:I would pay $1 a month

[MadKeithV]

And that's the problem with services like this. You don't really need that much music. 50 years ago people heard songs on the radio from time to time and were happy. I have enough good music stored on my HDD (most of it ripped off of CDs I bought) that I don't really need more.

Just because you personally don't need that much music doesn't mean there aren't plenty of people who do. I'm one of them, and that's why I'm a Spotify Premium user. It is a very useful service for me, especially because my taste varies from melodic rock over technical death metal to classical, and I can find 90% of the kind of stuff I like right there, right then, add it to a playlist, and download it to a device that I can then listen to offline. I have it on close to 8 hours a day.
And I really like the "discover" feature that allows you to check out music that is considered similar and/or liked by the same people. I have found some great things that way that I'd have been unlikely to hear of any other way.

Re:I would pay $1 a month

[omnichad]

You bring up an interesting point. Streaming movies, which is exponentially more expensive from production through distribution, is a cheaper subscription than a music streaming service. And then there's the fact that a lot of Netflix films have music in them too. That suggests their price is really too high.

Re:I would pay $1 a month

[omnichad]

Oh there's absolutely a market for people like you. It's just a small one. For everyone else, $10/mo. could easily be spent buying new and used CD's and building a collection of hundreds of CD's (and the corresponding digital rips) for less money. It's part of why Spotify is going to have a hard time attracting enough of an audience to a high monthly price tag.

Re: I would pay $1 a month

[AvitarX]

The percentage of movies available vs total amount of movies I'm vaguely aware of is far lower than using music and Spotify.

Even Pandora has relatively way more music than Netflix has movies / tv

Fascism?

[Anonymous Coward]

The streets will be cleansed by the blood of the weak

If we as a nation want to be profitable we will need to set zero tolerance on any and all black violence.

We shall turn Detroit into a city interment center and take all thugs and relocate them there

Forced labor for the useful and liquidation for the weak.

We can fuel half the United States with the burning of the thugs as fuel and keep the fourth Reich of America going.

Signed,

Wolf Bearclaw Hitler II

This must be...

[jd2112]

the ??? before 'Profit' in their business plan.

Are you joking?

[Anonymous Coward]

How to become profitable: charge for free service. The mind boggles.

Pay the musicians even less?!?!

[tipo159]

Cut royalty costs to the music industry

Given the constant bad press that Spotify gets about how little money artists get from their work being streamed on Spotify, how does the analyst expect them to be able to get away with paying the source of their content less?

Re:Pay the musicians even less?!?!

[jedidiah]

...except the problem with all of that is this is being driven by idiot savant musicians that don't understand that there's a money grubbing middle man in between them and Spotify. What the artist gets and what Spotify actually pays are two different things.

And that's not even getting into the problem of assigning a reasonable value to a single impression.

Re:Pay the musicians even less?!?!

[fermion]

Streaming services are not radio. They are going to replace physical media or even digital media files for the new generation. These services are not cheap advertising, so there is no way that payments to copyright holders are going to be minimized. We are going to need compulsory licensing and reasonable payments to right holders. The lack of such is what is causing the friction and inefficiency, and what is causing loses. I think the argument of whether streaming services are the future is over. This is what kids are used to, and what they will lobby for when they are older.

That said, small payments don't work. The administrative costs of any payments are huge, and customers rightly demand a expensive level of service once payments are made, even if those payments are very small. Probably a $15-$20 a year would cover some costs, but would still require ads. What might be more workable is a sponsored product. A branded credit card would do it.

Yearly payments could work. People pay for sub-basic cable that only supplies local channels. People pay for Hulu. But Hulu plus is almost $100 a year.

Re:Pay the musicians even less?!?!

[PopeRatzo]

We are going to need compulsory licensing and reasonable payments to right holders.

Not to "right holders", but to artists.

Limit copyrights on recorded music to 25 years and don't let them be assignable to anyone but the artist (maybe a spouse). Not children, not publishing companies, not record labels.

If I listen to Charlie Parker records, why should I be paying license fees to anyone? Every single person associated with that recording and the music therein is dead. Earlier tonight, I was listening to Dizzy Gillespie, Charlie Parker and Al Haig's recording of "Shaw 'Nuff" which was recorded 70 years ago today. Why shouldn't that entire recording be in the public domain? I'll pay a company to stream it, no problem. But why should any "rights" money change hands?

https://youtu.be/1IuZNbdwAk8

Re:Pay the musicians even less?!?!

[dwywit]

I pay ~USD$70/year for ad-free on Live365. It's a service I'm 98% happy with; some stations have started to "offer premium products of interest to our listeners" - I mean, if I wanted to know about organic skin care cream, I'd look it up. I really don't see the link between organic skin cream and celtic music. I pay so I don't have to listen to ads, and those stations that start advertising anything beyond CDs or digital downloads quickly lose their place in my "favourites" list.

I've even told them I'd pay more IF AND ONLY IF the extra could be sent straight to the artists and not the middle men.

Re:Pay the musicians even less?!?!

[swb]

At this point in history, I don't have much sympathy for musicians who complain about their lack of wealth.

Musicians who have risen to any kind of popularity in the last 10 years ought to be well aware of the greedy "recording industry" and its money grubbing ways. I'm pretty sure it's been common knowledge for the last 30 years.

I don't know why popular artists don't try to structure their income around self-production and distribution and making money off touring and reduce their exposure to the record labels.

Big complainers like Taylor Swift are a product of this industry -- would she have "made it" at all if not for the industry?

Re:Pay the musicians even less?!?!

[Anonymous Coward]

The reason they continue to play the game is that Payola has allowed the music cartels to create a monopoly. You can't play the game in a big way unless you sell your soul to Sony and company.

What do all bad plans have in common?

[Anonymous Coward]

They all start with the words, "If only..."

Laugh

[koan]

Proving what I have always said, musicians get paid too much and music isn't worth a dollar a song.

Closer to .05$ a song or less.

Now if we can just keep them out of politics....

Re:Laugh

[Anonymous Coward]

It is hard to put a price tag on a song, but I agree that songs themselves shouldn't make you more than a comfortable income, assuming you're competent at making them.

It is sort of odd to hear people complain about how little musicians make, for basically doing with their lives what they wanted to do, while no one complains that the rest of us have to work for our bread in jobs that have nothing to do with our hobbies.

There are working musicians out there who have actual jobs, some of them are also artists. Other artists hit the road and hope for a big break and millions, which they promptly waste on stupid shit.

Songs are worth the time it takes to write them and perform them once for them to be recorded. I bet you could probably get a certain number of paid Spotify users to support the initial release of a song from an artist they like. It wouldn't be millions, but that song would still be made and paid for.

Re:Laugh

[omnichad]

musicians get paid too much and music isn't worth a dollar a song.

For the junk that gets massively popular, yes that's true. That's why they need to sell millions of copies and let their labels reap in most of the profits. There are better musicians out there, but since they keep most of their $1/song and don't need to spend crazy amounts of money advertising, they're happy to remain relatively obscure.

Re:Laugh

[koan]

When did any musician deserve to be a millionaire? Since when did pop music Or any music) become such a lucrative career?

THEY PLAY MUSIC.... that's it, besides if you took the money out of it only the true artist would stay.

Ask yourself, why did music become so important?

Re:Laugh

[omnichad]

Who said anything about being a millionaire? I'm talking about the artists who are making $1/song and are happy with only selling 10's of thousands per year. These are the ones who don't just play music, they write it. They create art and culture.

Pop music where the artist gets 5 cents per download are the ones who become millionaires. And they don't deserve it any more than the label that puts the crap out. I never even tried to equate them.

WTF?

[rudy_wayne]

The following are listed at the bottom of this page under "Related Links":

Gunmen Kill 12, Wound 7 At French Magazine HQ
Misogyny, Entitlement, and Nerds
Officer Not Charged In Michael Brown Shooting
How To Execute People In the 21st Century
Seattle Approves $15 Per Hour Minimum Wage

Re:WTF?

[Anonymous Coward]

Serendipity. They reflect how the world is devolving due to the same deflationary economic policies the analyst is suggesting: all three are about less value, in other words austerity. And that's working wonderfully for Greece and other places.

Option 1 leads to less income for artists/middlemen, who will fight this or walk away (less contracts for new music), which leads to subscribers walking away, i.e. income loss.

Option 3 leads directly to subscribers walking away, i.e. income loss (similar to increased taxes leading to people walking away from the economy in terms of investment, tax evasion/corruption, migrating abroad or into the black market).

Option 2 means less infrastructure/R&D investment/less wages for employees, which means decreased service levels and unhappier/fewer, more overworked employees, which also leads to decreased service levels, which leads to subscribers walking away, i.e. income loss. Alternatively, if you just lift H1B limits and outsource everything to a second/third world country at lower wages but (let's assume) at the same service levels, subscribers will walk away because you take away income from the local economy and they will have less expendable income (see Ford history for the reverse). Employment in the outsource region will increase, but because you are paying them less while you charge with western income in mind for your service, your increase in number of subscribers there will be more than offset by the decrease in your primary target audience who could better afford it before. This is generally speaking of course, economically speaking a single small company like this will have little impact, but they do wield a disproportionate influence on the mentality of others and could lead change on a larger scale by showing a working example.

The analyst should start with self reflection, then on how to change the mentality of both analysts and investors/capital to focus on sustainability and increased wealth for all involved instead of destroying the ecosystem for short term profit of some, e.g. changing business model and increasing value by creating side channel income similar to how the Linux service system, cryptocurrencies or crowdfunding works. I.e. cooperation for the benefit of all, and common sense profits for many.

Then again, he could just work out how to create and enforce the specific vendor lock-in with the appropriate surveillance/DRM/police state so that noone can escape the given monopoly, and work on becoming part of the above-the-law-club himself, naturally.

Spotify doesn't know how to segregate the users

[Anonymous Coward]

I own several online businesses and while not all of them are raking boatloads of money I manage to keep them, even those performing below par, operating without net losses

I do it with segregating the visitors

You gotta know which users are keen in getting what, and you gotta entice the users to try something for free, first, and then, if the users want more, they'll have to fork out their $ for more of the good stuffs

Spotify on the other hand fails to do that

All they do is wholesale streaming of digital music

Without categorizing their users Spotify won't be able to optimize the true potential of its users

H1B music

[turkeydance]

Hindu Or Bollywood....see how i did that?

pipe dream.

[Anonymous Coward]

never nowhere does a site or service get every freeloader to pay even $0.33 per month. the sole reason most of them even use it in the first place is because it's free.

Re:pipe dream.

[tnk1]

Yes, the "Free Barrier" is a very hard one to break, although it does happen on occasion.

once the outdated royalty laws are fixed....

[Anonymous Coward]

spottify and their like disappear and people go back to either straight up stealing music, or paying for it again. I wish they'd go out of business today.

Charging for what was free will drive away users

[Anonymous Coward]

If I had to pay anything other than listening to ads, I would no longer use Spotify. It's funny how so-called experts seem to ignore the fact that charging anything will drive away users. Free is a magical number.

Scams and fraud

[Anonymous Coward]

A lot of these venture backed loss making companies are really nothing but fraud. Similar to mock auction fraud.

They create a company with a revenue stream, that only exists for the revenue and cannot make profits.
Another of the group will 'buy' a stake in it, typically small 2% or so, to establish a fake inflated value for the company.
Then they float the company based on this fake value.

The fake buyers in a mock auction are there to give a false perception of value. The links between the person running the auction and these buyers is hidden. Likewise the connection between the venture capitalists and the companies that buy tiny slices of crap loss making startups at inflated prices is also concealed.

Eh.. Spotify doesn't have long anyway

[Anonymous Coward]

Now that Apple has them in their sight, it's only a matter of time before every big music label pull away from spotify and go with Apple's Beats music streaming, which isn't free.

They've set the price at free

[Anonymous Coward]

Basically they've set the price of music at zero, and now they want to pretends its worth infinitely more than zero? The bands that let their music be on spoitfy are saying "here have our music for free dear listener".

Who cares if Spotify is profitable, it would be better to go out of business to make room for services that TRY to make money. Spotify is a stock market spam intended to be sold on the stockmarket for the benefit of its venture capital backers, to make money, not run as a business to make money.

Re:They've set the price at free

[omnichad]

The bands that let their music be on spoitfy are saying "here have our music for free dear listener"

I'm not saying that they are raking in tons of money, but they're not giving it away for free either. Otherwise, Spotify might be somewhat profitable.

my new business plan

[wept]

if everyone in the united states gave me just $1, I'd be rich!

no way I pay even $1

[Anonymous Coward]

If those annoying ads are still part of the deal.

Someone is doing something really wrong

[wvmarle]

Music with the occasional advertisement. Isn't that exactly what traditional radio has been doing for the past decades? Playing music for people to enjoy (broadcast for free), usually with some talk in between by a dj announcing the songs, telling funny things, doing interviews, etc. And most of those radio stations managed to make a decent profit out of it.

Here we have Spotify, doing effectively the same but broadcasting on the Internet rather than the airwaves. Playing music interspersed with advertisements, broadcast for free for anyone who wants to tune in to.

Radio stations have an expensive, power hungry transmitter to pay for. Spotify just needs an Internet connection (I suspect this to be cheaper).

Radio stations are hiring DJs, the more popular ones demanding high salaries. Spotify doesn't have DJs.

Radio stations have to maintain a studio building for the DJs and other staff to do their work. Spotify just an office and a rack in a data centre.

Radio stations are usually limited to a relatively small geographic reach due to the physics of radio waves. The Internet has no boundaries. Larger reach means more potential value for advertisers.

From the face of it, Spotify has many advantages compared to traditional radio stations. Lower overhead, larger potential audience so more advertising revenues. So how is it that Spotify can't keep up? Is the competition of traditional radio really so strong?

Re:Someone is doing something really wrong

[Anonymous Coward]

Radio stations are often paid by music companies to play certain high profile artists' songs, Spotify has to pay extra to be allowed to play certain high profile artists' songs.

Re:Someone is doing something really wrong

[Anonymous Coward]

I believe Spotify is still in an extremely expansive state, which requires money.
Once they reach their size goal, they'll stop dumping money into the expansion and then we'll see what the normal operating costs are.

Re:Someone is doing something really wrong

[henni16]

Radio stations are usually limited to a relatively small geographic reach due to the physics of radio waves. The Internet has no boundaries. Larger reach means more potential value for advertisers.

I have to disagree with that one; I doubt that this is an advantage. I think that small geographic reach can be an advantage if the region is sufficiently populated.
I haven't listened to a lot of radio in years, but when I did, there were lots of adverts by local businesses or the regional branches of bigger chains; you don't have e.g Ford advertising how awesome their new trucks are, you have some car dealership with a couple of local branches promoting zero interest payment plans.

I don't think there are many brands where it's a selling point that a stream is really popular in New York, Buenos Aires, Tokyo and Vienna; even with globally operating brands it's likely that there isn't a global marketing department paying for spots, but national ones who might want to tailor the ads they're paying for to the local market (not to mention language).

It's a potentially(!) large audience of people lots of ad buyers don't care about

Re:Someone is doing something really wrong

[wvmarle]

Valid point.

OTOH, the Internet - and the fact that this kind of services are streamed with separate streams to every listener - allows for targeting by location. Just like the good old Google AdWords allows local entrepreneurs to advertise to local customers.

Re: Someone is doing something really wrong

[AvitarX]

I'm not sure of you've used Spotify or not. I'm guessing not.,because Spotify is aot more than just servers. They most definitely need staff.,far more than a radio station. It's custom software.,it's not a bunch of tracks in a sub sonic storage.,it's more than that.

Re: Someone is doing something really wrong

[wvmarle]

I haven't used Spotify indeed, but I have been working for a traditional radio station so I know quite a bit about that side. It's for me simply hard to believe that Spotify would need more staff than a regular station based on number of listeners, considering so much is automated.

Re: Someone is doing something really wrong

[AvitarX]

Certainly Spotify has less staff per a station, but someone needs to keep the equipment running, ans I suspect more than one person is involved in programming their literally infinite stations, trying to keep the radio features, and the new music discovery better than that of Pandora, Google, and Beats. The app needs to be maintained and kept better than the others too. I could be wrong though, Wikipaedia says 1500 employees.

They are not one radio station, but infinite radio stations, and they need to negotiate for their music, in multiple jurisdictions.

The real problem they will have though, is that unlike radio, the [Spotify] stations are good enough that they replace owning a collection. Streaming services aren't a substitute for radio, they're a substitute for a music collection, and it's a business model that's having trouble taking off. Early systems were too restricted (both by technology of the time, and contracts) with too limited a selection, then came services that really work, but they provided it all for essentially free (less ads than real life radio). The internet streaming can't extract enough money to keep the labels happy, while simultaneously cutting into their sales. I don't know what the solution is, because people are going to be hard pressed to buy a track at a time when they had access to almost everything.

Nobody will pay Spotify to play this or that single, because Spotify won't generate sales for them.

I know I'm done buying CDs and tracks (I do pay for Google's service though), if they kill streaming, I'll be a pirate.

free user base just paid â1/£1/$1

[l3v1]

Well, I might be alone with this opinion, but I really do like Spotify, and if they'd raise their yearly subscription fees with a few (I do mean a few) bucks, I wouldn't mind very much. I generally don't mind paying for stuff I like.

They are looking to slaughter it

[Anonymous Coward]

Apple with the guidance and advisory of the U.S gov are looking to slaughter Spotify any way they can, just to get this market. That's what it's all about, getting all the markets and owning the economy.

Re:They are looking to slaughter it

[ruir]

Apple is too darn expensive. Do not get me wrong, we all at home own iThings. Everyone my sis home earns iThings. Heck, even my 70 year old father owns an iPad and sees his youtube videos in his smartTV. So getting to the point; app buying is comparatively cheap, and I bought more software than I ever had in any PC or Mac I owned in the past. The model is practical and the prices are fair. However, musics and videos, either for rent or worse buying, are definitively not worth the price they are asked. They are at least 2x to 5x times more expensive than they should be. If Apple just was able to change the tier pricing modelling, they could even make piracy not worth the time to their users at large, and I bet they would make far more money than now. Pity the media labels are greedy bastards.

Spotify is irritating

[bradley13]

I listen to the free version of Spotify once in a while, but it's fundamentally irritating. They have commercials, and that would be fine (since it's free), but the only commercials they have are 2-3 Spotify commercials that they repeat over-and-over-and-over, telling me I need to upgrade to get rid of the commercials.

In other words, they can't sell their advertising, at least not in Switzerland. But they don't want the non-paying user to have an uninterrupted experience, so they put in their own interruptions. The result is just irritating, and that's why I don't listen to Spotify very often.

Lastly, I find their prices kind of high. As someone who listens to music maybe once a week, I just don't see paying $15/month for the privilege. If they have a problem with too many people not buying their premium service, maybe that's because it's overpriced for the typical user.

One Weird Old Trick For Making a Profit...

[DeathSquid]

Don't turn away customers. Spotify *still* (checking calendar, yes it is 2015) refuse paying customers from Japan. That's 120 million potential first world customers right there. They are ignoring China and India, which are many hundreds of millions more potential middle class customers. They *still* geofence, making their service suck for travellers. They *still* apply discriminatory pricing. They *still* provide a reduced service to people depending where they live.

Here's a suggestion. Stop your discrimination. Accept all customers. Treat them equally and with respect. Charge them all the same price. Make their customer experience awesome. You will make so much money you won't be able to eat it.

Yes, I know that there are all sorts of issues with lawyers and licences. Stop making excuses. Fix them. That's the value you add.

Guys, it really is that simple. Work out who your customers are and serve them.

Re:One Weird Old Trick For Making a Profit...

[tage]

Tell that to the record labels and the agencies that collect royalties in different countries. THEY are the ones requiring the geo-fencing and different pricing for different countries.

If you try to negotiate rights to sell or play any music, you will soon start wondering if the record label wants your money or not, because it will seem like they don't. It does not even matter if you are part of the same company group as a the record label you are negotiating with. Been there, done that.

Re:One Weird Old Trick For Making a Profit...

[DeathSquid]

There's already a mechanical compulsory licencing regime in most countries for music, including Japan and India. That's how radio stations work. You don't need to even talk to, let alone negotiate with, record labels. http://megalv.com/2014/03/17/l... outlines how it works.

Re:One Weird Old Trick For Making a Profit...

[tage]

Granted, it has been nearly ten years since I was involved in creating an online music store. But it appears that mechanical licenses still do not grant rights to display album art to consumers, even if the two standard agreements I have seen appear to cover online distribution, at least for download services.

Note that the radio station agreements are very different from the online/internet/mobile agreements.

They already have a paid version...

[itsdapead]

You can already pay £10/month for ad-free, higher bitrate and the removal of a few other hurdles/restrictions on the free version. I think the problem is that's a bit too high a regular outgoing for light/infrequent users, or if you need more than one service. How about a 'pay as you go' option with x hours of listening for a few quid?

Also, selling advertising can't be working very well: the vast majority of the ads are for Spotify.

Re:They already have a paid version...

[omnichad]

It's not only too high, it doesn't account for the other use-cases people have for Spotify. Want to listen to an album before you buy it? Spotify free. And if I like the album, I'd rather buy it or the tracks I like than pay a monthly fee. Because why pay monthly for something you can have in perpetuity. Even though a lot of people use Photoshop and Microsoft Office, a lot of others (me included) will never buy again because of the lack of a truly standalone product. Let me decide when to pay money again to upgrade, otherwise I'm happy to stay on Office 2003 forever.

Re:They already have a paid version...

[itsdapead]

It's not only too high, it doesn't account for the other use-cases people have for Spotify. Want to listen to an album before you buy it? Spotify free.

Yup - have to admit that's the way I often use it. At one point, they had some sort of hook-up with an online store so you could buy albums. Presumably, that didn't work out.

However, there's plenty of other albums/artists that I might get the urge to listen to occasionally but don't feel the need to own for perpetuity - I'd probably pay a couple of quid a month for ad-free access to a bottomless library, but not £10, which is far more than my average monthly music spend.

Even though a lot of people use Photoshop and Microsoft Office, a lot of others (me included) will never buy again because of the lack of a truly standalone product.

I'm not sure that compares - you're talking about being forced to 'rent' a single product, or small suite of products that, previously, you would have bought. Spotify is giving you access to a vast music library - even if you only count the genres of music that you actually like it is far more than you would ever have bought. Also, new music that people actually want is continually appearing - whereas Adobe and Microsoft's problem is that their flagship products became 'feature complete' a decade or two back - everything since then is bloat, and nobody in their right mind wants to upgrade unless forced.

34 cents/eurocents/pence per month

[Anonymous Coward]

Make advertisers pay that.

a better idea

[slashmydots]

Since they already use a software client, copy what Steam does and sell bulk anonymous system configuration data to statistics companies. They could sell approximate internet speed to the government, processor brand to each processor maker for market share data, OS percentages to Microsoft, etc. That's got to be worth the amount they're looking for.

Correction...

[wardrich86]

"If Spotifyâ(TM)s current free user base just paid â1/£1/$1 every three months, it [would no longer be free, and a good portion of those people would find another service or go back to pirating]."

Re:Correction...

[Anonymous Coward]

One (1) USD per month? Unlimited music for 3 Cents a day, with a nice interface and a decent mobile app on top? 3 Cents per day to access all music you'd ever wanted with no lag, fast searching, playlists available on all devices, offline music for all devices, not having to hunt and pirate anything.

Anyone willing to pirate instead of paying 1 USD per month is a loser and a real cheapskate. Seriously.

I know: Sky Sports (or equiv)

[Anonymous Coward]

Just add Sky Sports or equivalent to Spotify and then watch the money flow. Hey... it seems to work for Sky and BT in the UK.

How to do that on a music-only service? No idea. Not my job to figure it out :)

Bandcamp

[Anonymous Coward]

Listen, buy, and support the musicians directly (or at least more directly...some labels work through Bandcamp for distribution). I like the idea of being able to listen to the music before I buy it like when I'd take a record into a listening room. I can download the MP3 whenever I want or not download it and stream the album I just bought via their app or both. I add albums to my collection, create wishlists, and even share my listening habits with friends. I can follow artists and hear their new album releases. I use bcrecommender.com, SOMAFM (which I also support via donations), NPR Music, and my friends to find new music.

Why care

[RockDoctor]

but it can become profitable with some specific changes according to one analyst.

So, another attempt to get rich on music falls flat on it's face, burning it;s investors arses in the process. And why should anyone care? If we believe the bullshitters, the entire music industry needs to die so that people can pay musicians directly, instead of letting the money be stolen by the music industry.

Well, that'll be great. And if the music industry goes down the shitter and takes the musicians with it, who's going to care?