15 years of Spotify: how long can you keep losing money?

For many, Spotify is the company that has saved popular music, but not musicians. The company, which turns 15 in 2021, seems to have confirmed the idea of ​​its founder and top executive, Daniel Ek, that the only way to end piracy was to develop a legal distribution system that was more convenient and efficient for users. users than those who violate the law.

Meanwhile, Ek has become one of the most influential figures in the music world, according to the unofficial industry magazine, Billboard. Which has more merit, because, with very few exceptions, Spotify has not made any money. And it still doesn't. What's more, the foreseeable end of the Covid-19 has coincided with a series of record profits from the three multinational record companies -French Universal, Japanese Sony, and American Warner- and an even greater expansion of streaming, and with a surprising slowdown. from Spotify, which has lost market share.

In principle, Spotify's strategy is reminiscent of Amazon's. For two decades, the e-commerce (and now also the 'cloud') giant renounced profits because it invested everything it earned in developing new services and expanding its operations, which include precisely the Amazon Music streaming service. But Spotify hasn't gotten the investor support that Amazon always had.

Since going public in 2017, the Swedish company has tended to underperform the Standard & Poor's, which concentrates the 500 largest companies on Wall Street. The only exceptions were 2018, just after the IPO, and the twelve months from March 2020 to March 2021, when Covid locked down the global economy. But, since the vaccines began to spread, and after two quarters in which it did not reach the number of subscribers that the market demanded, the company has fallen off a cliff. So far this year, Spotify has fallen 10.45%. The Standard and Poor's is up 19.5%.

The problems of making money with online music distribution are not unique to Spotify. Apple Music, which is the streaming division of the iPhone giant, has never made any money. Tidal -among whose founders and top managers is the hip hop star and husband of Beyoncé, Jay-Z- does not make its results public either, but the American press calculates that it lost 55 million dollars (46 million euros) a year. YouTube's revenue has doubled in a year, but its owner, Alphabet, does not give profit figures. And, in any case, the most successful service on this video platform is YouTube Shorts, which is not about music, but very short segments to compete with the Chinese company TikTok. Amazon Music -which has 75 million songs, compared to 50 for Apple Music and 35 for Spotify- does not make money either.

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— Home and Loving It Sun Jul 29 18:17:47 +0000 2018