Quote:
Originally Posted by DuckieTigger
How is Apple Music a big money maker? If Spotify is barely scraping by, then Apple Music cannot be hugely profitable at the same prices. Unless, of course, Apple pays near nothing to the content providers.
|
Not necessarily near nothing but they might have secured a capped payout deal with the studios. A variation of the Kindle Unlimited model where a studio is guaranteed a big minimum payout and Apple is guaranteed a cap on how high payments go.
Alternately, maybe Apple customers barely use the service.
iTunes is still active and their users are conditioned to pay for what they get.
Apple music might be feeding sales to iTunes just as KU feeds KDP. Of course, KU offers a subset of what the Kindle store carries...
Most subscription service costs vary as a function of subscriber consumption but their revenues are capped by the number of subscribers. If the customer base as a whole is a "voracious" consumer, the service ends up in the red. Remember Scribd and Oyster, especially the latter.
It might simply be that what makes Spotify desirable is what makes their cost structure high.
Pandora and Spotify are standalone companies so there is some translucence into their operations but the other services are extensions of their native ecosystems so they won't necessarily define profitability the same way.
I notice Spotify has lately started to offer bundles with Hulu. Maybe trying to reduce subscriber use? It's a weird business when you want your customers to use your service less.
