That's because they started when music streaming wasn't mainstream. Apple came in as pretty much the last of the big companies to enter this category. Spotify pretty much did all the work to get people into streaming, Apple just rode on the coattails.
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Spotify Has Twice as Many Paid Subscribers as Apple Music
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The reason why I do expect Apple to win in long term – I believe both are losing money, but Apple can afford to do so indefinitely, unlike Spotify.
I didn't think Spotify was investing in growth.
I thought Spotify was simply spending more money than they are bringing in.
It's one thing to take profit and invest it back into growth. Amazon had profit... they just chose to reinvest it.
It's another thing to never make a dime in profit because your expenses are greater than your revenue. Spotify would love to have profit... but it's simply not there. Their costs are higher than their income.
Did you ignore the part of the article where Spotify said they are growing faster now thanks to Apple Music. So, not really any revenue loss to speak of yet.
Obviously, that's the definition of a loss.
But it depends on what you spend the money on. Spotify spent ~$145 million on R&D and ~$245 million on sales and marketing in 2015. If you took these out, they'd easily have made a profit. They also hired and even invested in acquisitions (such as $10 million for the analytics startup SeedScientific).The bottom line is that making a loss can be acceptable if you have a good growth story. So far, Spotify doesn't seem to have any trouble raising money from investors, so it seems their story is good.
You can't use your phone at work? Not dismissing there is no browser interface .... but still a valid question.
For all this talk about billions of potential customers and years of head-starts... I think we're ignoring one simple thing:
There are only 45 million paying customers of on-demand streaming music on Earth.
Doesn't that seem a little low?
Streaming radio is even lower... with only 4 million people paying for Pandora.
Perhaps paid music streaming is not, and will never be, a big industry overall.
There are only 45 million paying customers of on-demand streaming music on Earth.
Doesn't that seem a little low?
Streaming radio is even lower... with only 4 million people paying for Pandora.
Perhaps paid music streaming is not, and will never be, a big industry overall.
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When people say revenue loss, they mean "Spotify is losing money year after year".
I noticed today that some of my favourite albums I downloaded from Apple Music won't play anymore as the they have disappeared from Apple Music and also from iTunes. So now I have to buy the CDs from either Amazon or Ebay or somewhere else. I think the streaming thing is not for me. It seems in the end I'll end up paying for streaming, then they take the music down and I will have to pay again to buy the physical format. Streaming may just turn out to be a rip off. Why should people get paid over and over again for work they did once, when the person who painted your house gets paid once?
"Despite rising users and revenues, Spotify continues to operate at a loss due to expensive royalties and revenue sharing with music label partners."
No. They continue to operate at loss because they charge too little for their service. The royalties are not expensive and you should share revenue with the folks who produce the content. If Spotify chooses to basically give its service away for something close to free, then that is the problem causing them to operate at a loss.
No. They continue to operate at loss because they charge too little for their service. The royalties are not expensive and you should share revenue with the folks who produce the content. If Spotify chooses to basically give its service away for something close to free, then that is the problem causing them to operate at a loss.
One stream pays the record label $0.007.
One purchase pays between $0.70 and $1 depending on song price on iTunes.
To follow your analogy, you're paying the person who painted your house 1/100 of their salary whenever you feel like it.
Yeah, I've been saying this for a while. I love what they started but they have too much competition, no profits and no real competitive advantage to take on the likes of Apple, Google and Amazon long-term.
Also, the simpler UI advantage it enjoyed over Apple Music will be wiped out (and then some) when iOS 10 launches in a few months.
Obviously, that's the definition of a loss.
But aren't R&D and sales/marketing vital business components?
You can't "take those out" to make they claim that they "would have been" profitable.
I see your point though. Maybe they're closer to being profitable than it seems (although every article still points out they they've always operated at a loss... and will likely continue to do so)
Like I said in another comment... at some point those investors are gonna want their money back.
They can keep taking investor money... and can keep growing their users... but it's not a good story if they still lose money on each user.
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It's good to have competition in any space. Personally, I chose Google Play Music because having YouTube Red (YouTube with no ads) included was a nice perk.
Was with Apple Music until they announced a student discount not available in my country. Made me do the switch.
Even FaceBook has only 12 millions after the first year of public access
So, Apple Music is more scalable than FaceBook. (Beats Music is limited, I don't think more than ⅓ of people know its existence)
I guess, this is still a dooming Apple? I mean, they didn't buy Spotify, a company already reached the maximum rate of growth for paid user (this spike maybe partly caused by the partnership with Starbucks. I got a new Spotify account to get free Starbucks stars), and pick a company that actually selling their music streaming business as a BOGO deal with their headphone business, which Apple need if they're ditching headphone jack
See? Why should we get two bird with one stone, when we can get a elderly bird with a bigger stone?
So, Apple Music is more scalable than FaceBook. (Beats Music is limited, I don't think more than ⅓ of people know its existence)
I guess, this is still a dooming Apple? I mean, they didn't buy Spotify, a company already reached the maximum rate of growth for paid user (this spike maybe partly caused by the partnership with Starbucks. I got a new Spotify account to get free Starbucks stars), and pick a company that actually selling their music streaming business as a BOGO deal with their headphone business, which Apple need if they're ditching headphone jack
See? Why should we get two bird with one stone, when we can get a elderly bird with a bigger stone?
Pretty much identical to the words coming out of BlackBerry after the iPhone was released in 2007. BB grew until about 2010, and then collapsed. I'm guessing a similar experience for Spotify: give them two more years of growth. At least BB was making a big profit when they were shooting their mouth off: Spotify isn't even making profits now.
They charge the right amount. The problem is not enough people are paying.
There are 100 million people listening to Spotify... but only 30 million people are paying the bills.
The free tier is killing them. The ad revenue is not enough to offset the cost of those 70 million free listeners.
Royalties ARE expensive when you stream to 100 million customers yet only 30 million pay for it. It's a balance problem.
And it becomes a scaling problem as more free customers are listening.
If the average song costs $1.29, you can buy 7 songs/month and not reach the cost of these services. If you're a huge consumer of music then I guess these services make sense, but I have a 2000 song library that already has most of what I like, and I have only moderate interest in most of the stuff coming out these days. I'll stick with buying music.