A new deal with Sony Music Entertainment will provide Spotify with lower royalty costs and more money in their pockets. Along with Sony Music, UMG and Merlin Network have also renegotiated terms with Spotify to provide better music, sooner. That is, if you’re a premium customer.
Spotify CEO, Daniel Ek, said he would never want to force customers into paying for premium or watching advertisements. However, in recent years, revenue sank and Spotify lost around $600 million just last year. With the new deal, royalty costs won’t kill Spotify as they had in previous years and were expected to do again this year before the deal.
While it may not seem “cool” to pay for premium, the numbers say otherwise. Recently, it was reported that revenue from premium subscription payments from 2015 to 2016 increased about $1.32 million. While that may seem minuscule, it is important to remember the digital age is on the move, and watching advertisements in between songs does get old.
Maybe Spotify did this for the better, but some worry that the company will never be profitable.