Apparently good accounting makes a world of difference, who knew. This article “Accounting Explains How Spotify’s Business Model Can Succeed” I found on Billboard.biz, points out some interesting facts. Spotify’s current business model shows that almost every dollar brought in by the users exits the company immediately to rights holders leaving Spotify near empty handed. The current model will run the company into the ground. If by adding new members to your business ultimately means the company loses money there’s something wrong. On top of that, the cost of employee salaries grew quicker than revenue sales.
This article mentioned that the heaviest Spotify users will end up having to pay more for a higher tiered subscription to help their profit margin. I’m a very heavy Spotify user and I personally don’t like having to pay more for a company’s inability, for whatever reason, to maintain a sustainable business model.
Of course there are a lot more variables to this situation than I’m getting into, but I hope the company can figure out how to balance out their financials. Really makes me wonder what all was involved in that Facebook deal with Spotify and who’s benefiting more. It’s a good thing Spotify still has room to grow and has the users to support it so they can fix the situation hopefully without upsetting the heavy users, like this guy.
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