Spotify’s success is heavily qualified, though. It may be the Netflix of music, but it’s never posted a profit; in 2022, with nearly a half-billion users around the world, around 200 million of whom pay for the service, it lost 430 million euros (the company is based in Sweden).
How does one get to repeatedly lose hundreds of millions of dollars on and on and somehow endure? Some stockmarket shit?
Another thing: let's not forget that when music streaming showed up, the music industry was already struggling. The CD era was over; everybody and their mom were sailing the high seas on P2P networks.
Companies with lots of investors can afford to operate at a loss. Generally, once a company has a significant market share and has flushed out enough of its competitors, they can charge higher prices later for whatever service they provide for a significant profit. That is the theory, anyway.
Also, companies can just flat-out lie for new investment money. They can manipulate projections or inflate company value to offload shares to a new sucker. You can have CEOs that just blabber off about bullshit or sell services that never really materialize. (Elon and his self-driving car promises or the now concluded drama about Theranos as examples.)
In the end, a company can succeed or it fails hard. It doesn't really matter to the executives since they still get paid and investors will take the loss. (In some of the worst cases, the government has to prop up the company to keep it from collapsing, so taxpayers take the loss.) If the company fails gracefully, hopefully they will have a collection of resources to sell off to get some of the money back.
It is how Netflix operated in the streaming market.
Operate at a loss but the growing user base is enough to please and encourage investors. Once enough people are using your service, hike prices.
Finanical gain was never the purpose of Spotify. What spotify provides is the closest channel we know to monitor human emotions. The ability to corelate this data with all the other data gathered from social networks and search engine is well worth the loss.
How does one get to repeatedly lose hundreds of millions of dollars on and on and somehow endure? Some stockmarket shit?
Another thing: let's not forget that when music streaming showed up, the music industry was already struggling. The CD era was over; everybody and their mom were sailing the high seas on P2P networks.
Companies with lots of investors can afford to operate at a loss. Generally, once a company has a significant market share and has flushed out enough of its competitors, they can charge higher prices later for whatever service they provide for a significant profit. That is the theory, anyway.
I know that many of the schemes from the above scenario are usually illegal these days, but the above example is the gist of it. Walmart's attempted entry into Germany is a good example of how to fail hard at taking over a specific market: https://ecomclips.com/blog/why-walmart-failed-in-europe-what-went-wrong-in-germany/
Also, companies can just flat-out lie for new investment money. They can manipulate projections or inflate company value to offload shares to a new sucker. You can have CEOs that just blabber off about bullshit or sell services that never really materialize. (Elon and his self-driving car promises or the now concluded drama about Theranos as examples.)
In the end, a company can succeed or it fails hard. It doesn't really matter to the executives since they still get paid and investors will take the loss. (In some of the worst cases, the government has to prop up the company to keep it from collapsing, so taxpayers take the loss.) If the company fails gracefully, hopefully they will have a collection of resources to sell off to get some of the money back.
It is how Netflix operated in the streaming market.
Operate at a loss but the growing user base is enough to please and encourage investors. Once enough people are using your service, hike prices.
Finanical gain was never the purpose of Spotify. What spotify provides is the closest channel we know to monitor human emotions. The ability to corelate this data with all the other data gathered from social networks and search engine is well worth the loss.
https://thebaffler.com/downstream/big-mood-machine-pelly