Selling a burger is inhernelty profitable for McD, they sell it for more than they spend on manufacturing and shipping and serving it. Each new burger sold adds more profit.
Serving music is unprofitable for Spotify. They collect your monthly subscription fee, then every additional song play makes Spotify lose money. They don't want to have zero song plays since then nobody would subscribe, but their goal is sell the profitable thing (subscriptions) while minimizing the unprofitable thing (song plays).
Just to add to this restaurant based allegory, Spotify is like an all you can eat buffet that tries to serve out lots of sodas so you get bloated and don’t eat the expensive stuff they have
> their goal is [...] minimizing the unprofitable thing (song plays).
If that's the case, how do you explain those two features :
- the repeat button
- the "automatically play similar songs" option
In the first case, since I don't know how it works, maybe they have to pay only one time for a song per user listening to it during a period (say a month). But I doubt it.
In the second case, it's Spotify explicitly saying : "here are songs you don't intended to play but that we picked automatically and are playing to you".
If you look at Netflix, sure they have the feature that automatically launch the next episode. Or they try weird stuff like live or play anything... But they also have the "Are you still watching ?" feature, to make sure that they don't display content to an empty room.
Spotify doesn't have that, it can just play songs indefinitely without any human interaction.
Well...yes, not necessarily fundamental, but it's the same class of problem cinemas and restaurants have (to pick two). What do cinemas mainly make money from? What do restaurants mainly make money from?
Yes, that seems to be true (and is that % you've guessed maybe too low? Maybe far too low?). Even with that though, it's extraordinarily fine margins -- w/r/t the businesses that I mentioned, the majority of the income comes from those value-adds, if they weren't there it would generally be difficult for the businesses to survive financially. That's where I was coming from.
To me, Spotify seems to be using podcasts in a similar way. I assume it's because the central business model is unsustainable when combined with investor pressure; they can't just focus on core product because they're burning too much of other people's money in an attempt to outcompete everyone else
Serving music is unprofitable for Spotify. They collect your monthly subscription fee, then every additional song play makes Spotify lose money. They don't want to have zero song plays since then nobody would subscribe, but their goal is sell the profitable thing (subscriptions) while minimizing the unprofitable thing (song plays).