I was surprised when reading this article. Spotify has 70 million customers that pay for an account, but they make barely any revenue. The CEO, Daniel Ek hired Barry McCarthy, a "finance whiz", who helped Netflix when they became public, to help him convince investors that Spotify is a good investment although they don't make much money. Unlike Netflix, Spotify doesn't plan to make its own music and would not benefit from it. Thus, they are trying to find other ways they can make some money. Right now, they offer record companies free access to their data that they can utilize to plan album release dates and other logistics. One thought is to start charging for access to this data. I am curious to see what else McCarthy and Ek have in mind and if it will be enough to bring in some cash and convince investors.
https://www.bloomberg.com/news/articles/2018-03-23/spotify-saved-music-can-it-save-itself
3 comments:
This is an interesting article. Spotify is considered to be a very large and lucrative company. However, if they can't figure out their revenue streams, I am afraid they will become unattractive to investors, especially if they become public. Spotify has a ton of data and knows what consumers want in regards to music. I imagine they can make good money on selling data, but if thats not enough, they may have to explore purchasing exclusive music rights to certain artists' songs. It will be very interesting to see where Spotify goes.
It's surprising to read that Spotify, that's such a big platform for music, doesn't make too much profit even after remarkable sales. Spotify is popular within college and high school students generally and I think after its collaboration with Hulu it's only going to gain popularity. Spotify has acted like a bridge between artists and consumers and it would be a shame if it doesn't find a way to improve its margins.
Spotify has collected tons of consumer data, I think they could use it wisely. Although investors could be convinced that Spotify is a good investment, the fact that Spotify could not generate enough profit would stop investors. I think that Spotify has very big potential to do well, but before that, they have to find a way to make money.
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