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For many, Spotify is the company that has saved popular music, but not musicians. The company, which turns 15 in 2021, seems to have confirmed the idea of its founder and top manager, Daniel Ek, that the only way to end piracy was to develop a legal distribution system that was more convenient and efficient for customers. users than those who break the law.
Meanwhile, Ek has become one of the most influential figures in the music world, according to the
unofficial
industry
magazine
Billboard
. Which has more merit, because,
with very few exceptions, Spotify has not made any money
. And it still doesn't. What's more, the foreseeable end of Covid-19 has coincided with a series of record profits from the three multinational record companies - the French Universal, the Japanese Sony, and the American Warner - and an even greater expansion of streaming, and with a surprising slowdown Spotify, which has lost market share.
In principle, Spotify's strategy is reminiscent of Amazon's. For two decades, the e-commerce giant (and now also the 'cloud')
gave up making profits because it invested everything it earned in developing new services
and expanding its operations, which include precisely the streaming service Amazon Music. But Spotify hasn't gotten the investor support that Amazon always had.
Since it went public in 2017, the Swedish company has tended to underperform the Standard & Poor's index, which concentrates the 500 largest companies on Wall Street. The only exceptions were 2018, right after the IPO, and the twelve months from March 2020 to March 2021, when the Covid blocked the global economy. But, since vaccines have begun to spread, and after two quarters in which it did not reach the number of subscribers demanded by the market, the company has collapsed.
So far this year, Spotify has fallen 10.45%. The Standard and Poor's is up 19.5%.
The problems of making money with online music distribution are not unique to Spotify. Apple Music, which is the division of the
streaming
iPhone giant
, has never made any money. Tidal - among whose founders and chief executives is the hip hop star and Beyoncé's husband, Jay-Z - also does not make its results public, but
the US press estimates that it lost $ 55 million.
(46 million euros) per year. YouTube's revenue has doubled in a year, but its owner, Alphabet, does not give its profit figures. And, in any case, the most successful service of that video platform is YouTube Shorts, which is not music, but very short segments to compete with the Chinese company TikTok. Amazon Music - which has 75 million songs, compared to 50 on Apple Music and 35 on Spotify - doesn't make money either.
But, in many of those cases, losses are not a problem in this industry.
Apple is going to maintain and strengthen its
audio
streaming
division
because it is a fundamental piece in the strategy of its chief executive officer, Tim Cook, to develop its services division, which includes everything from credit cards to Apple TV +. Amazon is not shutting down its
streaming
service either
.
And, despite the million-dollar losses of Tidal, Square - the online financial services company that Jack Dorsey runs in the mornings, since in the afternoons he runs the social network Twitter - paid in March 297 million dollars (250 million euros). euros) for the control of the company. That really is a Jay-Z hit, and not all his
number one
(or his wife's):
getting them to pay for a company five times what they lose in a year
. Dorsey's goal, however, is not about
streaming
, but about leveraging Tidal's base of hip hop musicians to build an online financial services platform for music professionals.
Thus, Spotify has created a market and has become the undisputed leader, as revealed by the fact that it has twice the number of users than its most direct competitor, Apple Music.
However, it has failed, at least for now, to achieve sustained profitability.
At a time when Big Tech is getting into content creation en masse, and with musicians trying to get a better share of
streaming
revenue
, that may put even more pressure on Ek.
For now,
however, there are no rumors of purchase or changes on Spotify.
The inventor of the
streaming
industry is
not going to change.
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