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Robert P Bellin
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This analysis is more misleading than anything it claims of Spotify. There may be some questionable expansion (I would say no, see below) or inflated salaries, but none come close to impacting the business the way royalties do. If lawsuits end up adding to what Spotify owes, that only exacerbates the problem and magnifies my point. As for doubling down on unprofitable ventures, isn't that what all tech companies that can't make money do to boost their valuation? And if the only way to fund operations is to burn the furniture, doesn't it make sense to get as high a valuation as you can for the couch? Hasn't that been Amazon's strategy for 20 years? The complaint about royalties may be shopworn and date back to 1999, but given that no one has been able to make a profit on digital music since then, perhaps it's right on the money. Has EVERY digital music company since then been profligate and stupid? It should be noted that Pandora, with a very impressive user base and a conversion of listeners to ad dollars that WAY exceeds terrestrial radio, hasn't been able to make any money either. And they've stayed with their core product and NOT done much expansion. The bottom line is that given the current royalty structure, there is no way to generate a meaningful profit streaming music. And its not because people don't like it - they do. Its not because it can't generate a lot of revenue - it does. But to trot out the old bromide, you can't lose $5 on every sale and make it up in volume.
Toggle Commented Aug 29, 2016 on Spotify IPO Watch: Blame ≠ Profit at hypebot
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Aug 29, 2016