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Spotify Isn’t Making Any Money

Chances are you’re familiar with Spotify. You’ve probably even used it a few times—and if you registered you’ve almost certainly started seeing status updates every single time one of your friends listens to a damn song! Wow that’s annoying. (All you have to do to stop that nonsense is change the settings on your account, but we digress.)

Spotify is a pretty cool service in some ways. It’s given us a chance to access obscure music whenever we want without buying anything; we just have to either pony up a paltry $9.99 a month or listen to some stupid ads between every two or three tracks. And we don’t have to feel guilty about using it because we’re not stealing the music we hear. All good, right?

Not really. The problem is that, despite the Facebook bromance and potential relationships with big-name sponsors like Coca-Cola and Samsung, Spotify’s business model doesn’t seem to be working. In fact, their net income for 2011 was negative $60 million. That’s a whole lot of iTunes downloads, guys.

The funny thing is that the main factor dragging the company’s earnings down is the cost of royalties—in spite of the fact that the artists and labels who produced the music in question make less than 5/1000 of a penny for each play—less than any other comparable service.

Our question: Why is Spotify Premium so cheap in the first place? Wouldn’t most hardcore music fans pay more than 10 bucks a month for unlimited streaming content?

Does Spotify need a re-branding or what?

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