MBW Reacts is a series of analytical commentary written by Music Business Worldwide in response to recent major entertainment events or news reports. only MBW+ users Get unlimited access to these articles. The following article originally appeared in the latest MBW+ audit emails, Issued exclusively to MBW+ subscribers.
Who has the larger user base: Netflix or Spotify?
Now, there’s no competition: it’s Spotify.
According to its latest third-quarter results, Daniel Ek’s Green machine is accessed 640 million MAU (monthly active users) for the quarter ended September.
Netflix official user base click rate 282.7 million “Members” of the same period. Additionally, Netflix recently confirmed that it now has 70 million people signed up for it “Ad-supported” tier, launched two years ago.
What’s the biggest difference?
all Netflix The user is pay for something.
Netflix’s “ad-supported” tier will cost you $6.99 per month Visiting in the United States, or £4.99 Visit UK monthly.
this is a low cost layer – not one free layer.
At the same time, in SpotifyAbout 60% in 640 million Users around the world are currently paying there is nothing… because Spotify The “Ad-supported” tier remains completely free.
This is just one of the reasons why major music companies, the most prestigious of which is Sony Music Group (through its chairman) Rob Stringer – increasingly questioning whether Spotify Should start charging small fee Because of its “free” package in mature markets such as the United States.
Take a quick look Netflix product The menu hints at the giants’ other big hopes for Spotify’s future: price rise and price differentiation.
a standard Netflix Subscription costs today in the U.S. $15.49 per month;one high quality sub comes with additional perks like 4K viewing and spatial audio, cost $22.99 per month.
The price of the latter is approx. Twice the size of Spotify’s largest individual tariff Today in the United States ($11.99 per month).
Here are the stats: Thanks to its more ambitious pricing, Netflix subscriber ARPU value exist Latin America only far greater than Spotify subscriber ARPU value worldwide (including US and EU): $8.40 and $5.17 respectively monthly.
(Source: Netflix and Spotify investor filings, converted at third quarter average exchange rates.)
So, looking to the future, the “majority” of music can turn to Netflix There are strong arguments for why Spotify should (one) raise its price, (two) Introducing more expensive tiers for “power” users, and (three) charges a fee for its U.S. advertising funding tier.
But there are total different arguments been raging between Spotify and music copyright industry these days.
This is one where, as Daniel Ek Literally means counting his money, Spotify may see some damage to its long-held position.
you are a MBW Reader, so you know the context.
Earlier this year, Spotify – recently added audiobooks to its premium tier offering – reduced Machinery usage rates It pays songwriters and publishers in the United States. SPOT claims it has the authority to do so through a “tying” loophole in its contractual agreements with publishers, as determined by the publishers. Copyright Royalty Board 2022.
This “bundling” move is expected to cost songwriters and publishers US$150 million How much royalties they receive from Spotify each year compared to what they received this year meeting Received before the vulnerability in question was activated. (MLC is fighting Spotify in court over the matter and is likely to win.)
SpotifyOf course, songwriters also have a dark history of stinginess.
You no doubt remember when pointSix years ago, Amazon Music joined other companies in calling for higher royalties for songwriters in the United States, but the main goal of the call ultimately failed.
At that time, we heard for the first time Spotify Constantly justifying such behavior to songwriters: “We already donate about 70% of our funds to music rights holders. As a business, we need our portion to survive, so if you want more cash , just knocking on the door of the record industry.
OK, Spotify No exactly Say those words, but that’s actually what the company said in 2018: “It’s only natural that everyone wants to get a bigger share.” [streaming’s revenue] pie. But this cannot be at the expense of continuing to grow the industry through streaming.
This is not a one-off. Back in 2016, Spotify’s then-chief financial officer claimed that the ability to reduce music industry royalties would “Critical to Spotify’s future”.
Then, by 2021, Digital Media Association (DiMA)further expanding on this “poor me” argument.
Dima, as Spotify Mouthpiece, songwriters are advised to ask point Pay them more money – record companies don’t lower their Royalties for services – similar “Burn it down to save the village”.
There are strong arguments for why this is unfair Songwriters and Publishersgenerally speaking, get paid about quarter royalties they collect music recorded by brothers For streaming on Spotify. These debates will and should continue.
but Spotify previous get out of jail free card In this debate—”There’s no money in the pot; don’t ‘burn the village,’ folks!—” is now dead and buried.
partly due to Spotify More than 2,000 jobs were laid off last year, in part due to cuts in marketing costs. point It’s expected to post its first-ever annual operating profit in 2024 — a more substantial figure than most expected.
Based on Spotify’s third-quarter results (and its fourth-quarter forecast), the company is expected to post clean revenue US$1.5 billion Operating profit for the year to the end of the year.
at the same time, Daniel Ek and his Spotify co-founder, Martin LorensonTogether we deliver more than $840 million (!!!) Spotify stock over the past 18 months… More than US$400 million I just cashed out last week.
The premise of the long-standing debate is that Spotify Need to recover profits composer – or indeed any music copyright holder ——In order to survive, now obvious error.
No need Burn down the village. But please stop pretending you’re not Full of wealth.global music business
