Discounted promotions: Promos such as the £0.99 for 3 months have supercharged Spotify’s growth for the last 18 months.A number of factors underpin this decline: This is particularly challenging for a model with already wafer thin margins. Rights and associated costs accounted for 83% of Spotify’s 2015 revenue, up from 81% in 2014 and this resulted in a dramatic fall in Spotify’s gross margin per user: down from $4.20 in 2013 to $3.45 in 2015. Rights costs are Spotify’s Achilles Heel. But a closer look at the numbers reveal some even more important findings. The stories oscillated between the broken nature of the underlying economics to how streaming is the future of the music business. Tuesday’s media scrum around Spotify’s financials illustrate that whatever ground Apple and Tidal may have made in recent months, Spotify clearly remains the poster child / bellwether for streaming.
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