Spotify Pays Enough Revenues to the Music Industry

Music works in reverse. You listen to it, then only you like to buy an album. If you can not listen to the artist's work and purchase enough money for your work, the album can not earn as much money as possible. This is a more important economic problem each time you play with streaming service. I will pay a few percent of the pennies. Because Spotify makes payments in other ways, such as exposure, Spotify does not have to pay as much as the album's sales.

Spotify inherited the decline of the music industry as early as 2008, as the Internet declined the interests of music with a free downloading culture. However, even at the peak of the music industry in 1999, consumers spent an average of $ 28 per year (41.46 in inflation). Today, even a subscription fee of $ 120 per year, many people want to pay for music again. Thus, as more consumers adopt new music models, Spotify triples the potential revenue of the music industry.

Spotify can earn a lot of trust in the recovery of the industry. In the US music industry last year, paid streaming media accounted for 40% of sales. Spotify also offers free service, which accounts for a small part of its income. Spotify last year's revenue was EUR 1 billion (5 billion dollars), up 39% compared to the same period last year. However, we need to prove to the investor that the music service is likely to be a viable business. The annual loss amount has increased in the past three years and reached 2 billion euros in 2017. This is mainly due to the royalty paid by the rights owner of the music.

In 2017, in the United States alone, the music industry produced $ 8.82 billion. The industry continues to grow due to the increase in streaming services (Spotify, Apple Music, etc.). Pop songs will ensure the majority of income. The total income of top 10 artists in 2016 was $ 362.5 million. The question of what makes songs popular has been studied before and has achieved varying degrees of success. Each song has major functions such as lyrics, duration, artist information, temporary, beat, loudness, chords. In our previous studies we predicted the popularity of songs considering lyrics but the success was limited

The majority of Spotify's revenue is used to pay licensing fees to music publishers, and its stable revenue comes from monthly membership and advertising fees. These sources of revenue are not enough to cover a number of licenses that support Spotify's various music offerings. Spotify did not elect to sell new shares when it was published. By selling only existing stocks, Spotify avoids many programs and banking fees. Nevertheless, in order to measure the interests of the investor and the stability of the stock market, it is necessary to negotiate with the investment bank. In this case, investment banks like Morgan Stanley can take tens of millions of dollars from consulting fees.