Tuesday, June 07, 2016

Spotify: An upside-down pyramid

Digital Music News report on the proportion of users who Spotify rely on:

90% of Spotify’s Revenue Comes from 30% Of Its Users
This, surely, isn't that surprising though - if you're operating a freemium model, it's probable that most of your revenue will flow from the premium end rather than the free end:
89.9% of Spotify’s revenues come from just 31.4% of its users, according to more financial data now surfacing. The 2015 filing, registered with EU regulators last week, showed that paying subscribers generated a hefty $1.96 billion in revenues. By stark comparison, free, ad-supported users generated a relatively paltry $222 million.
It is a problem for Spotify, though, who are currently burning money like you wouldn't believe.
That effectively translates into a cash inferno, with everyone seemingly benefiting… except for artists, a group witnessing deteriorating per-stream revenues over the past few years. According to the same filing, rank-and-file employees are enjoying sharply-rising salaries, with average compensation now surpassing $168,000 per year. At the upper end, top executives and board members are pulling down north of $1.3 million a piece, with stock options potentially minting billionaires after a successful IPO.
Not, of course, that Spotify's business plan is to get close enough to profit in order to cash in its chips. Of course.