Spotify Bleeding From Licensing Costs
Photo courtesy of madstreetz
Spotify has just published its financial results for 2009, and the European streaming music service is bleeding fast. Spotify may have users “by the balls” (in the words of original Napster founder and Spotify investor Sean Parker), but content owners have Spotify in an even tighter grip. According to the financial statements for U.K.parent organization Spotify Limited, published on Music Ally this morning, the company booked 11.32 million pounds in revenue during the year. About 60% of that money comes from its 250,000 paying subscribers. The rest comes from advertisements that Spotify shows to the vast majority of its 7 million users who use the free Web-only version of the service.
Digital Music: Spotify, Google and Grandfathering Label Deals
Last year, around the time that Apple acquired music service Lala, Google and Spotify were deep in acquisition discussions, says a source with knowledge of the negotiations. Ultimately no deal happened, and the two companies tried to negotiate a deal to have Spotify pre-installed on all Android phones instead. But the deal almost happened, says our source, and Google was going to pay nearly $1 billion for the service. Ultimately the deal went sideways because Google was demanding that all label deals be grandfathered in. And Spotify wanted a $800 million+ walk away fee if the deal faltered (Google had a similar provision in their Admob acquisition).
Here’s what “grandfathering” label deals means: The deals that music labels do with online music companies contain a provision that if the company is acquired, the deals terminate. That’s exactly what tripped up Facebook when they were looking to acquire or partner with a music startup a few years ago.
- How Spotify Almost Sold To Google For $1 Billion, Plus New Apple Rumors
Apple in talks for iTunes music subscriptions, blocks Spotify in the process
“Just as we’ve heard many times over the past few years, Apple is apparently in talks with music labels for a subscription-based iTunes plan that would give customers unlimited access to songs for a fee, the New York Post reports.
Sources tell the paper that Apple’s VP of internet services Eddy Cue, who heads the iTunes and App Store teams, has been in talks with music executives as recently as a few weeks ago. Apple has in mind tiered pricing for the service between $10 and $15 — but it still needs to work out issues with the labels like how much music to include in every tier, and how long consumers have access to content.”
- Apple in talks for iTunes music subscriptions, blocks Spotify in the process