Just like Snapchat, right? All they got to do is figure out how to make money from all of those users who aren’t paying them anything.
Just as likely, they get rid of the free tier and many people just go elsewhere like pandora or I heart radio or the amazon music tier that comes with Prime.
Maybe it will work the way you say, but it’s definitely not as guaranteed as you make it sound.... and to the best of my knowledge they weren’t profitable before the free tier, either.
You are seriously dumber than shit or something.
They have a TON of paying customers; more than enough to be profitable.
They are losing money because of the licensing spend on free users. They do not need to figure out how to make money from these people to be profitable; they don't need to KEEP these people either. If they cancel the free tier they will of course lose tons of "customers", "customers" who are losing them money. They will also convert many of these freeloaders into paying customers, and there's zero reason to think existing paying customers would be mad the free tier is gone.
Like seriously how are you this fucking stupid? Do I have to draw you a picture or something?
You could point to some quarterly reports or something like that instead of tales from your ass.
What lartjof Spotify has never ever made a fucking dime of profit do you not understand?
Spotify is in a uniquely shitty position compared to something like Netflix.
1) they pay a royalty per play, unlike movie services which are usually a flat fee so your most loyal users are the least profitable
2) there have basically the exact same product as their competitors. I am a paying Spotify subscriber, and there is literally no reason for me to stick with them over Apple Music, google music, that jay-z one, amazon music,or whatever they are now calling Xbox music. All of these services are basically exactly the same. On the margins one has Taylor Swift and one has Beyoncé albums a few weeks earlier. But net-net Spotify has 0 pricing power because there is literally a half dozen identical services to move to.
3) The record labels have Spotify screwed. Netflix was pretty smart to start developing their own content because they realized that eventually their suppliers would squeeze them out of existence if they didn’t have something to fall back on. But what is Spotify without Arista or Columbia records? They’re fucking not worth a damn that’s what. This is proven by the fact their gross margins look more like Mattel than google. If the big record companies come up and ask for an extra penny they don’t have much negotiating leverage. They claim that one day they will get big enough to get some but it will never ever happen because of the half dozen competitors ready to eat their lunch. You can ask the cable companies how well holding out on popular channels has worked for them in holding down their costs over time. And you can look at your cable bill and understand it hasn’t worked very well.
4) they actually make money on the free tier from a gross perspective (at about a 17% margin) This is better than your scenario really, but it kind of blows up the whole “if they dump free tier they are hugely profitable” because it would actually get a bit worse unless they cut sg&a to go with it.
I’m sure there is a profitable model for Spotify, but imo it’s going to look a lot more like twitter than google. Both Spotify and twitter have crazy valuation.
