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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."
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.
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
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.
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.
the ??? before 'Profit' in their business plan.
Any insufficiently advanced magic is indistinguishable from technology.
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.
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...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.
A Pirate and a Puritan look the same on a balance sheet.
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.
"95% of all Slashdot
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.
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.
You are welcome on my lawn.
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
You are welcome on my lawn.