Given that Spotify is private, how would you know if Spotify is making money? How about Pandora Radio? They have about 80M users; is that a failure?
What exactly is meant by Netflix not owning their delivery system? That seems like a rather specious argument. HBO GO, Hulu, MLB, Sling TV and the 100s of other OTT services seem to be missing from your industry understanding.
>Given that Spotify is private, how would you know if Spotify is making money?
Industry observers see the financial numbers from Spotify filings in the UK and Luxembourg and can piece together that they spend more than they take in. Another source of information about Spotify health was the Sony email leaks[1] revealing the unfavorable terms to license the Sony music catalog.
Lastly, CEO Daneil Ek has been on record[2] saying, "we believe in the business model of Spotify, and believe that ultimately we’ll become profitable at some point..."
It is not wild speculation that Spotify is losing money.
>How about Pandora Radio? They have about 80M users; is that a failure?
Pandora is also still losing money.[3] Whether it's 80M or 800M users, it's a failure if the business can't turn a profit. (Otherwise known as costs exceeding revenue.)
The overwhelming "costs" in both music streaming services is the royalty payouts for licensing music. So far, not enough people can be convinced to pay $9.99/month. Or, the people that are willing to pay something-per-month are not willing to pay higher amounts such as $19.99.[4] So far, the financial numbers are not working.
I think the key is so far. It might not turning a profit, but ~1bn in revenue is still a strong argument that you can get the subscriptions model working for online music streaming and is not doomed to failure from the very beginning.
> Given that Spotify is private, how would you know if Spotify is making money? How about Pandora Radio? They have about 80M users; is that a failure?
There are plenty of public reports of Spotify revenues and losses that show they're having trouble. Pandora has had continual losses and the stock isnt doing well either. There's only more drama coming with artists and studios demanding more money so it's a very tough market and isn't going as well as it might seem on the surface. User counts don't matter if the business can't sustain itself.
> What exactly is meant by Netflix not owning their delivery system?
Traditionally there were cable companies that owned the delivery infrastructure and studios that produced the content. Netflix is neither (although they're getting a little into the production business). They will continue to feel pressure from both sides as the traditional companies start to compete much more strongly with digital offerings. Regardless, if Netflix was actually producing all the content they have, they wouldnt be in business today.
My point in response to the GP reply is that subscriptions aren't easy. Netflix and Spotify were named but both have issues and arent clear winners. Leasing content doesn't show the true cost of that content and while it might work for audio/video resellers, it's not going to help all the major web content/news publishers.
>> Regardless, if Netflix was actually producing all the content they have, they wouldn't be in business today.
Sure, but that's just a growth phase, right ? Once Netflix becomes fully global(and as successful it hopes), won't it revenues fully support the content ?
What exactly is meant by Netflix not owning their delivery system? That seems like a rather specious argument. HBO GO, Hulu, MLB, Sling TV and the 100s of other OTT services seem to be missing from your industry understanding.