Why Spotify is losing BILLIONS

Despite Spotify’s massive popularity and lovable brand, it’s still losing money and struggling to produce a self-sustaining business.
The platform has 551 million users in which 220 million of whom are premium subscribers. This is much higher than its biggest competitor Apple Music which boasts a premium subscriber base of just 88 million.
So, how come with this huge number of paying subscribers and global reach, Spotify just can’t seem to make a profit?
In this episode, we'll learn the fundamental problem with Spotify's business model, its multi-billion dollar investment in podcasting and ads to fight this, and why its tech giant competitors like Apple and Google don't just lower their fees to kill Spotify.
Subscribe to ‪@DarkModeDigest‬ for more tech stories and insights!
- Loryn from Dark Mode Digest
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Video chapters:
00:00 Introduction to Spotify
01:22 How Spotify got started
03:53 Spotify's business model
07:20 Spotify's billion-dollar investment in podcasting
09:13 What's the future of Spotify?

[@hackbyrd]

The problem with Spotify, relative to Netflix, is that Netflix creates original content. But Spotify can’t because it’s music. They should have invested in original content in terms of podcasts but they made a huge mistake by investing in celebrity podcasting. They should invest more on podcasting with micro influencers

[@DarkModeDigest]

💯 i think they're starting to do that now. Investing in their podcasting platform and ads to attract new creators onto their platform (using money as an incentive) by doing what youtube does and sharing ad revenue. They're bleeding cash though and investors are worried

[@disadadi8958]

They could've invested in record labeling stuff?

[@DarkModeDigest]

@@disadadi8958 yeah for sure. But its prob in their contracts with music labels that they can't. At the end of the day, the labels hold so much power. They prob made it a hard rule that streaming services like Spotify can't invest or produce their own original music to compete with labels

[@disadadi8958]

@@DarkModeDigest Yeah, that's true. I personally swapped to Apple Music from Spotify because of the student discount, I do like Spotify interface etc. more, though.

[@sonythabeast]

I guess SoundCloud wins

[@Simon_Gray]

I was using spotify for years, but i watch i alot of KZbin so decided to get KZbin Premium and use KZbin music instead.

[@gorkemuzun7451]

Same

[@tuankhoiphan1824]

Same here

[@DarkModeDigest]

Yeah makes sense. I've been using Apple Music for a few years now but I'm now eyeing KZbin Music for this same reason

[@quas3728]

I tried so many times to make youtube music as my main music app but It always failed. reason 1 It still doesn't have "search within playlist" feature. apple and spotify has that of couse. how can i organize playlist? like... I shuffle playlist and I become like "I don't need this song in playlist anymore" but what If I have a lot of songs in playlist. reason 2 It doesn't have offline mode. reason 3 It moves slow on my pc. when I skip the song. It takes few seconds to play. it's bizzare because literally all other music apps works smooth (spotify, soundcloud, apple music). It's probably youtube's problem. I really wish It was good as spotify because I have youtube premium with expensive 13 bucks price.

[@DarkModeDigest]

@@quas3728 ahh good to know. thats kinda crazy they dont have offline mode

[@varunrajesh]

spotify ruined their app by removing lyrics for non-premium users

[@DarkModeDigest]

smh wow

[@hawsrulebegin7768]

Spotify should have spent more on investing in new music artists.

[@DarkModeDigest]

yeah. they're doing that now though

[@ninthvalkyrie]

I just listened to an interview by Ali Abdaal that they launched Audiobooks. I guess they are tapping into creator-led content very heavily, as well as newly published authors

[@DarkModeDigest]

yep 100%. Content is king. They've realized its important to not just invest in big time creators but also small and even new ones. By doing what youtube does with revenue sharing, it gives more incentive for people to create on spotify's platform and expand its content

[@brycejn]

This was super well done. Very interesting topic

[@DarkModeDigest]

thanks man! glad you found this insightful

[@Athukorala89]

Plezzzzz do Video about Dezzer..

[@DarkModeDigest]

Deezer is a really interesting case. Let me look into it!

[@meghpatel2216]

Time for Microsoft to yoink another giant

[@DarkModeDigest]

Lol maybe

[@janette2691]

I never saw the appeal of Spotify. To me it was like having the worst parts of radio and mp3s. I rather just stick to radio and my ipod thank you very much 😂

[@DarkModeDigest]

it provided great user experience, at this point, every song available to stream at one affordable price, and good quality. Plus, as more and more people use it, more and more people want to jump on the bandwagon and use it. But, it most certainly doesn't appeal to everyone. Do what works for you. There are times where I also just enjoy the radio... i don't have to think, I just turn it on and music plays

[@shinysky8119]

Deezer financial W I guess ?

[@DarkModeDigest]

Deezer is in a much better position than spotify. Deezer is actually a subsidiary of a larger company called Access Industries. Access Industries owns a ton of different companies, media companies especially. The big one they own, in addition to Deezer, is Warner Music Group (about 80% of it). So, Deezer gets better deals on royalties.

[@shinysky8119]

@@DarkModeDigest didn't know that, very interesting and explains a nice chunk of the story

[@DarkModeDigest]

@@shinysky8119 yep for sure!

[@Athukorala89]

​@@DarkModeDigest woow your explanation is wonderful..✌️✌️✌️

[@DarkModeDigest]

@@Athukorala89 thank you! :)

[@sonythabeast]

SoundCloud is the winner i guess

[@DarkModeDigest]

soundcloud struggling too

[@JA809_]

Soundcloud is dead

[@hawsrulebegin7768]

Soundcloud is still full of spam messages. It’s just awful these days.

[@Gingermycat]

KZbin is the best podcast channel and if they were to do videos more on the platform it'll be more profitable! I know of just one podcast on Spotify that has video that goes on the app.

[@DarkModeDigest]

it really is