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SpotifyIs Spotify’s Business Model Broken? (CNET)
Spotify’s financial performance in 2011 was abysmal. As revenue increased 151 percent from 2010, the on-demand streaming music service saw losses widen 60 percent for the same period, according to documents posted by PrivCo, a company that sells data on non-publicly traded companies. BetaBeat Virtually every new dollar of revenue went directly to music companies as royalty payments, evidencing the fact that the more members Spotify adds, the more money the company loses. This is a clear indication that the online licensing fee/royalty model is increasingly restricting Spotify’s ability to generate sustainable margins using its freemium model. The Next Web Spotify’s 311 employees grew salary costs 173 percent year-over-year in 2011, outpacing revenue growth, according to PrivCo. Business Insider Unlike Groupon, Spotify can’t just trim its marketing spend to cut its losses. It either has to completely change its business strategy, or get much better at its business. TechCrunch In related news, Warner Music Group’s owner Access Industries and previous investor Idinvest are investing $130 million into music streaming startup Deezer. Even though the company is doing well in its country of origin, France, it is still at the very beginning of its international expansion. Read more