![]() Online music streaming is by no means a new concept. Company shares took a 5% dive in the wake of the announcement. In its first earnings report, in Q1 of 2018, Spotify announced that it had generated some $1.36 B in revenues. In classic ad-supported business model manner, advertisers pay Spotify for exposure on its network. ![]() The mobile version of the service features still more restrictions on the free tier. Free songs are interrupted with ads though. The free version of the service makes all songs in the Spotify catalog available for listening. ![]() Subscription is only the premium tier revenue mechanism of the operator though. That’s how the company collects payments from its users. The labels then pass on the earnings to their artists. It pays the labels every time a subscriber listens to a song. Spotify negotiates with music labels and makes their property available for streaming. To gain a proper grasp of why Spotify shares are valued as they are, you need to know how the company makes its money. It is an on-demand music streaming service, one that serves hundreds of millions of subscribers all over the world, while generating billions of dollars in revenue for rights holders. Its business model quite innovative, Spotify produced a solution to the rampant piracy dilemma surrounding the music business. Spotify is a major tech company the revenue stream of which does not depend solely on ads. the first currency is expected to lose value against the second currency. the first currency gains value against the second currency.
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