Spotify surges past 70 million paying subscribers

This stupifies me.

70 million subs multiplied by 10 bucks each per month is 700 million.

WTF do they get 19 billion? Plus, it's a paid service so no ads i would assume to generate more income right?? I don't have any familiarity with any online music service.

Inflated valuation just like Facebook, Instagram and dozens of others.

Remember, Uber hasn't made a single solitary penny, totally unprofitable in every way, yet its value is way high.

Total farce!

Originally posted by hearme0:

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This stupifies me.

70 million subs multiplied by 10 bucks each per month is 700 million.

WTF do they get 19 billion? Plus, it's a paid service so no ads i would assume to generate more income right?? I don't have any familiarity with any online music service.

Inflated valuation just like Facebook, Instagram and dozens of others.

Remember, Uber hasn't made a single solitary penny, totally unprofitable in every way, yet its value is way high.

Total farce!

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Originally posted by verice:

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Originally posted by hearme0:

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This stupifies me.

70 million subs multiplied by 10 bucks each per month is 700 million.

WTF do they get 19 billion? Plus, it's a paid service so no ads i would assume to generate more income right?? I don't have any familiarity with any online music service.

Inflated valuation just like Facebook, Instagram and dozens of others.

Remember, Uber hasn't made a single solitary penny, totally unprofitable in every way, yet its value is way high.

Total farce!

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You do need to multiply that $700m by 12 to get to a gross subscription revenue of $8.4b per year and also factor in their ad revenue from the other 70 million non-subscription users. Don't forget to take into account their profit (which is unknown from this article) as well. The valuation may not be as bad you think. Uber's valuation is crazy, especially considering, as you stated, they've yet to turn a profit.

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As far as current profits, a lot of their paid users are students at half price. Also, they pay out $0.006 per song, and I think they announced the average is a bit more than that. I stream something like 300 hours a month. Most of my coworkers do the same, or more. Even assuming just 10 tracks per hour, that's $18 in royalties from a $5-$10 subscription.

I realize I might be a heavy user, but most everyone around me uses spotify the same way.

If we assume that operating fees are $2 a month per user (probably higher), and that the average sub fee is $9 a month per subscriber across the whole service (it's probably less), that leaves $7 a month for license fees and profit. So if someone streams 40 tracks a day, they start losing money...and that's assuming the best for everything. Does the average user actually stream less than that, even including people like me in the average?