Will you stop using Spotify now? Vote

[Zensō]

You’d think so:

- they have plenty of customers, so economy of scale should work well
- they pay the artists one of the smallest amounts per song, so you’d think plenty should stay behind (although Deezer seems tomaat even less)

And yet they have a € 430 million loss in 2022… while the smaller ones seem to have a profit. Clearly this company has a problem.

One of the main challenges Spotify faces is that under their current contracts with the major labels their margins are quite slim, so there is only limited financial benefit as the number of paid subscribers increases. The labels take a straight cut off the top that is somewhere around 75-80%, and as subscribers increase, royalties and server costs increase at the same pace, with economies of scale never really kicking in. Adding lossless at current subscription rates would just exacerbate this situation. I think it’s probably a fair argument that the labels are more to blame for the problems with streaming (low artist payouts, financial losses, etc.) than the streaming companies themselves. Not that I support Spotify as a business mind you…

 

[Jimbob54]

French…

So is Qobuz so I ain't no xenophobe

 

[voodooless]

So is Qobuz so I ain't no xenophobe

From what I remember when I trailed it some time ago, it was all very French/France centric. It may have changed today, I didn’t bother checking again.

 

[Jimbob54]

From what I remember when I trailed it some time ago, it was all very French/France centric. It may have changed today, I didn’t bother checking again.

I don't think I had a problem with the library to be fair, just how they (didn't) let you manage it.

 

[danadam]

If they add lossless they will crush Tidal and Qobuz and will gain millions of subscribers
So I really don't understand why they don't do it.

So... like 1 or 2%? Maybe that's why
According to wikipedia (in millions):

           active users    paying users
           ------------    ------------
Spotify           365.0           165.0
Qobuz               0.2             0.2
Tidal               4.2             3.0

 

[Kagemusha]

I seldom see Deezer mentioned here. Is there a reason for that?

I tested deezer and I like it, is much cheaper also if you pay for the whole year. I think is good.

 

[Philbo King]

So I watched the video. Interesting. I'm not sure how much I could comment on it here because the end is both political and promoting the video maker's own project (he says it's not for profit though).

You have misunderstood the video though. Spotify are advancing money to the labels, not the other way round. The connections of the majors to the players in this game (whether Apple, Spotify, Amazon, Tidal, Google/YouTube where links have been reported) is a key part of this.

He is wrong about Apple though. They are using streaming at a loss to support their hardware business, it is a feature of phones and it is now a feature of their new headset venture. And they make so much money that they can continue the game for a long time. Amazon seem to be doing the same thing. Music is why the people I know talk to Alexa.
So those players at least have an interest in the current model, and if they shared the market share of Spotify and Tidal between them over the long term then maybe fees to musicians might start to recover.

However, Meta will buy Spotify if it reaches the stage of collapsing, I predict - very cautiously - if they want to be seriously in the VR game - do they - they will need a bigger streaming backbone, and they buy things. Free Spotify is paid by ads, and Meta understand that concept.

I actually see video streaming going the same way. Sure, Netflix is there now, the film studios' streaming services, but over time and maybe quite quickly, the services not owned by the big hardware and other service providers will find themselves in the same boat. Apple and Amazon will have more to spend on streaming stuff than any single maker, even Disney, in the long run. In fact the music companies have made a better choice in a way by letting other people chew through money trying to make streaming profitable.

I'm going to make another very odd prediction. I suspect that copyright management is about to start playing into this. It is going to make sense, if you make so little out of your old titles, just to wave goodbye to them. This may hit older jazz and classical musicians very hard, but beyond that who makes a living from 1950s or even 1960s recordings any more, with very few exceptions? Or even the majority of newer ones? Those titles make money for nobody, so why not just cast them adrift: they chew up space everywhere for little good. The streaming services themselves compete on the "number of songs" they have, but that is surely a negative: so use another selling point like your interface or the number of products you work with.

For the majors and probably other labels, this also starts to make sense as they still need to track everything and everyone, keep old master tapes, and so on. Sooner or later this turns into a loss per recording for older and esoteric material. Waive copyright, dump the stuff on YouTube and walk away, leave Google to not be able to find any royalty earners that may have a remaining claim. Eventually, though, Google will have the same idea. They can't preserve everything for ever. So we will be left to libraries, archives and small online communities to actually save a selection of what gets dumped. Consider how much of what was released on 78s is preserved now...

Correction noted. Fixed the original post.

 

[Galliardist]

So... like 1 or 2%? Maybe that's why
According to wikipedia (in millions):

           active users    paying users
           ------------    ------------
Spotify           365.0           165.0
Qobuz               0.2             0.2
Tidal               4.2             3.0

That table is rather old, but the scale of things is still accurately presented.

 

[Galliardist]

From what I remember when I trailed it some time ago, it was all very French/France centric. It may have changed today, I didn’t bother checking again.

Both Deezer and Qobuz have escaped from that situation. It does mean that there is more European music on those services than, say, Tidal. I'm not sure that is a bad thing, since it's now largely hidden from Australian users - you have to search, or read the articles to get that - and I presume US users as well, since Qobuz feels more US-centric to me now in its front page.

 

[Galliardist]

You’d think so:

- they have plenty of customers, so economy of scale should work well
- they pay the artists one of the smallest amounts per song, so you’d think plenty should stay behind (although Deezer seems to pay even less)

And yet they have a € 430 million loss in 2022… while the smaller ones seem to have a profit. Clearly this company has a problem.

Spotify has paid a lot or money to be the biggest fish. But how do they turn that position into anything useful?

On our trip through Europe last month, I got to see what non-audiophiles value. Both the people we stayed with had stereo systems, but they were barely in use: it was Echo devices and "Alexa"... and all their friends were the same. My sister has had a new system put in her car (since she works in a place that does such things now, this was partly teaching her what to do) and it's run entirely by Siri, hands off. And these aren't kids we are talking about: they are in their 50s and 60s. Others are moving to Bluetooth devices and phone control.

Audio has become a sideshow to home automation and convenience, and the conventional stereo is to my mind a dead end now. It's one I use, but I'm an old fuddy-duddy. The only retreat is the dedicated room or the dedicated home theatre. The first is for a small minority, in the second audio is mostly a sideshow to video. The other places, as seen here, are near field listening for computers and headphone use. Here again, it's at computers and music is only one use, as it should be.

That means that the audio services attached to companies doing other things are at the big advantage. The small operations appear to have done their homework on market segments that aren't catered for in the short term. Whether they exist in ten years' time is another matter.

The good news for Spotify is that their losses aren't enormous given the size of the company. The problem they have is that they are not in a friendly market and they have nowhere to go. Sure, they have managed part one of an Amazon type business approach - they are the known name with lots of customers. But where Amazon had made their business scalable, so it could take advantage of that market position to grow, how does Spotify grow now, to pay off its debts and make some money?

Everything audio is in the same dead end. You can't expand into selling podcasts or audiobooks to make a fortune the way that Amazon used a selling platform to sell more goods. It's too late to do a Spotify voice assistant (I believe they tried and failed, not sure) and their agreements probably make it hard to do Spotify hardware. What's left? There isn't really a way to buy a way out. Even if they, say, bought one of the big hi fi companies, they don't get the voice assistant and the hardware reach they need. Buying part of the music industry will just alienate the rest of it. They don't seem to own anything of real substance apart from their name recognition and some probably unfavourable deals with record labels that I'm sure expire regularly.

They can probably break even with cutbacks to staff and maybe a price increase. But that makes it even harder to address their long term viability. Where do they go?

 

[SimpleTheater]

Everything audio is in the same dead end. You can't expand into selling podcasts or audiobooks to make a fortune the way that Amazon used a selling platform to sell more goods. It's too late to do a Spotify voice assistant (I believe they tried and failed, not sure) and their agreements probably make it hard to do Spotify hardware. What's left?

They've already begun to sell "space" on their apps - labels promoting specific artists, upcoming concerts, etc.

They have to capitalize on their 400+ million subscribers around the world. If they can't figure that out, they are kapoot/

 

[Galliardist]

They've already begun to sell "space" on their apps - labels promoting specific artists, upcoming concerts, etc.

They have to capitalize on their 400+ million subscribers around the world. If they can't figure that out, they are kapoot/

They do, of course, also have a massive database of individuals and their musical tastes, which I forgot about in my long posts.
The more I think about this, the more I come to believe though that ultimately their value can only really be realised in the context of a takeover or merger by one of the players in the wider - well, what do we call it now? - world of network service providers? who don't yet have a suitable music arm, such as Meta or Samsung. Actually Samsung, who have been taking over audio hardware companies and own Harman, may be a better home from the consumer's point of view than Meta, though most of what they do is as a conduit for others when it comes to Internet services.

 

[beagleman]

Expectation bias.

What We Hear

FIRST SOME UPDATES: This is a promising sign. I’ve managed to publish another article in less than a week and it’s a big one! Since last wee...

nwavguy.blogspot.com

Awesome article, and something that most "audiophiles" need to be aware of.

"I know what I hear" sounds like a clueless person audio wise!

 

[SimpleTheater]

Awesome article, and something that most "audiophiles" need to be aware of.

"I know what I hear" sounds like a clueless person audio wise.!

Appreciate the link, but I can definitely taste a good wine vs a bad one. That's not to say all cheap wines are bad, but I definitely prefer the $25-40 wines over the $8 ones.

 

[Emlin]

Appreciate the link, but I can definitely taste a good wine vs a bad one. That's not to say all cheap wines are bad, but I definitely prefer the $25-40 wines over the $8 ones.

Blind, many wine 'experts' can't tell red from white.

 

[SimpleTheater]

Blind, many wine 'experts' can't tell red from white.

Well, they're idiots. I always chill my white wine, so a blind test would be super simple.

 

[pablolie]

Well, they're idiots. I always chill my white wine, so a blind test would be super simple.

It takes little trainig to tell red from white, irrespective of the temperature, blindfolded. Even between several white wines (Chard vs Sauvignon Blanc) or reds (Pinot Noir vs Cab Sauvignon or Barolo) it takes little training to tell the difference pretty much 100% of the time. Now when it comes to telling vintages apart or wines of the same apellation - nah, that becomes hit and miss. And there are many fantastic white wines under $20 (New Zealand Sauv Blanc is a fav, and typically falls into that) and reds between 20-23$. I think there is zero parallel to audio there, other than in the irrationality of the luxury brands (buy options for Chateau Lafitte Rothschild at $1k a bottle etc ...)

I think Spotify sounds very good and I can thoroughly enjoy the music, but my fav artists/releases I buy in non-lossy formats anyhow. For the vast majority of music, you won't hear a difference.

 

[DanielT]

Well, they're idiots. I always chill my white wine, so a blind test would be super simple.

Maybe so but blindly it is not easy. Here people who work professionally as chefs who test food blindly. Okay, those are selected examples of really bad guesses, but nonetheless, it's fascinating:

 

[Liya]

This is an audiophile forum: anyone here with a decent sound system can spot the difference between an AAC compressed stream and a flac stream. I believe you are wrong when you say that "most people can't tell the difference".
About the CD: it is an obsolete technology, abandoned for at least 15 years: new CD players are difficult to find on the market and no record label prints albums on CD anymore. The only way to directly support artists is to buy their music on Bandcamp (and yes, it is in Flac format)

Typical recycled garbage.

 

[pablolie]

Typical recycled garbage.

Well, I do buy some artists' bandcamp albums for support.

But I agree that the ability to differentiate between redbook and good compressed (i.e. 256k VBR) requires many factors to be hearable, and doesn't diminsh music enjoyment to begin with. Anyone that claims the contrary can take several internet tests (Archimago) and shatters their own dreams about reliably being able to tell the difference.