Currently both Spotify and Apple Music top the ranking of the most used music streaming services worldwide, with 60 and 30 million subscribers respectively. But, as we have seen in recent years, it is not a very profitable business based on the economic results that Spotify presents every year.
According to Jimmy Iovine, co-founder of Beats Music, the streaming music service that Apple bought in 2014 for $ 3.000 billion, and later launched Apple Music a year later, music streaming services are deficient look where you look.
Jimmy states in the interview he has given to the media Billboard, that Amazon sells products and offers a Prime fee to its customers, Apple sells iPhones in addition to other products, so both can offer a service even if it has lossesBut Spotify only sells music in streaming, so if you ever want to get out of the red numbers that it has been in since its inception in 2008, you will have to look for alternative income streams.
The latest movements of Spotify show us how in the last agreements that it has renegotiated with the main record companies, hm contributed reduce the amount of royalties that pays them to play their music, at the cost of starting to offer a series of limitations to users of the free version of Spotify. According to the Swedish firm, this new agreement will soon allow it to get out of the red and stop being a service where investors have to inject money over and over again.
Apple has also managed to reduce the amount it pays to the main record companies, taking advantage of the agreement that Spotify has previously reached, confirming not only the bet of the record companies in this way to obtain income Given the lack of sales in disc and digital format, they know that it is the future of the industry, and if they want it to be maintained, they have had to reduce the income it generates. The goose that lays the golden eggs should not be killed.