Do you use the Spotify application or not, gang? Despite being the number one music app, in fact Spotify continues to lose money! What is the reason?
If you want to listen to music, what application do you usually use, gang? Maybe the majority of you will answer Spotify.
Application streaming This one music is really popular, it has even penetrated the numbers 100 million premium users in this year 2019.
Unfortunately, in reality Spotify is still often at a loss, gang! How can it be like that? So, can this problem make Spotify go bankrupt?
Spotify and the Loss It Suffered
Photo source: India Today Spotify is a music service streaming from Sweden, gang! The company has been around since 2006, where Spotify was first launched in 2008.
Even though it's been quite a while, in fact this music application was only able to benefit in the 4th quarter of 2018 yesterday, you know!
This means that it took Spotify 10 years to make its first profit. That is quite a long time for a large-scale business model.
Spotify managed to make a profit of $107 million or equivalent to IDR 1.5 trillion. Unfortunately, these advantages can occur more because of Spotify's investment in Tencent Music.
Previously, Spotify had tended to suffer significant losses. Reported from Fool.com, you can see it through the table below:
| Year | Total Loss
|
|---|---|
| 2013 | Rp1,009,293,820,920 |
| 2014 | Rp1,890,423,347,120 |
| 2015 | Rp3,684,723,473,200 |
| 2016 | Rp.8,635,069,356,760 |
| 2017 | Rp19,785,362,997,400 |
| 2018 | Rp1,249,601,873,520 |
That's a hard number to imagine, isn't it? As the number 1 music app in the world, why did this happen to Spotify?
Reasons for Spotify Loss
Reported from various sources, there are several reasons that make Spotify lose from year to year. Just take a look at the reviews below!
1. Music Is Expensive
Photo source: Vox Spotify pays licenses for copyright issues to each music label and artist whose songs are available on Spotify. That requires a very large amount of money.
Moreover, with the increasing number of Spotify users, the amount to be paid to the label also increases.
For information, the fees that Spotify has to pay to the record label are 50% to 70% of each song played.
This amount may vary depending on the label and artist with whom Spotify has an agreement.
2. No Original Content
Spotify relies heavily on labels and musicians to get content that users can listen to.
This has been felt by the service streamingNetflix. In the end, they create original content that is produced by themselves.
By creating original content, Netflix doesn't have to pay licenses to third parties. Spotify might be able to emulate the concept to spare them a loss.
3. Have Many Heavy Rivals
Photo source: 9to5Mac Spotify is not a player who monopolizes the music world like Windows does on computer operating systems.
They have very competitive competitors like Apple Music, Google Play Music, until Pandora.
The subscription fee for each service is the same, which is $9.9 per month or Rp. 140 thousand. If Spotify increases their subscription fees, they could lose users.
Apple Music and Google Play Music can still benefit from other business sectors owned by their parent companies, but where will Spotify get the other benefits?
It could be music service streaming the richer run the risk of losing continuously until its poorer competitors, such as Spotify, go bankrupt.
4. Many Users Use Pirated Apps
Spotify gives its users two choices, whether they choose a free version or a paid premium version.
Unfortunately, many people choose a middle ground: choose the free one but get the premium version.
Usually, they use mods to get it. In fact, this is very detrimental to Spotify, gang!
How to Make Spotify Profitable
If Spotify does not change the pattern of its business model, it is not impossible that one day this company will be declared bankrupt and disappointed many of its customers.
So, there must be changes made by Spotify in order to get out of the condition. There are several things that can be done to save Spotify from bankruptcy.
1. Creating Content Podcasts Original
Photo source: Complex As Jaka mentioned before, Spotify can imitate Netflix's way by creating original content.
Not a song, because the CEO of Spotify once said Spotify is not a record label, but content podcast.
Moreover, Spotify recently acquired two companies podcasting, that is Gimlet Media and Anchor.
With this, of course Spotify hopes to benefit from not having to pay for a license to the label.
It's just, in reality podcast not as popular as video content, except that people are fed up with visuals and prefer to enjoy entertainment in the form of audio.
2. Become a Label or Create Your Own Song
One of Spotify's competitors, Apple Music, has made their own music and established themselves as a label.
This can be imitated by Spotify so they don't have to pay royalties to the label. the term, cut the middleman.
If Spotify didn't intend to become its own label, maybe they could at least produce songs that could be created using AI.
An example is the instrumental songs that often enter into playlistsRelaxing Piano. After all, many people listen to songs like this to accompany study or work.
3. Placing Ads
Photo source: Marketing Interactive For Spotify users who have the free version, you will often hear advertisements that invite us to move to the Premium version with various promos.
Maybe Spotify can take advantage of that slot to advertise other people or companies like we're used to on radio.
Spotify can also promote the latest songs (especially from less well-known artists) so that Spotify users can listen.
As users of the service, of course we hope that Spotify will be able to get through its difficult times so that we can continue to listen to music through it.
If Spotify really had to go bankrupt because it continued to be hit by losses, wouldn't we as consumers feel the most disadvantaged?
Therefore, if you can afford the premium version, pay for it. If not, then please enjoy the free version with ads, gang!
Also read articles about Music or other interesting articles from Fanandi Ratriansyah
