[vGPU]

This will hurt Google and may destroy Spotify. If they’re the only ones that get the 0/4% deal and the other services like tidal are paying full price that’s a blatant anti-competitive agreement.

[notyourwork]

Agreed and this news comes just 6 months after Spotify hiked their subscription price. Which at the time was well received by the stock market.

How profitable would Spotify be if they were paying full price?

[carstenhag]

Netflix went a different route. After being offered to only pay a 10% cut, they made calculations and decided to not offer in-app-subscriptions at all. This article has details: https://www.theverge.com/23954852/google-netflix-app-store-d...

[Mindwipe]

> How profitable would Spotify be if they were paying full price?

They're not profitable now so very not.

[notyourwork]

Last quarter they posted 1.94% profit margin.

[FirmwareBurner]

Question: how does Spotify pay so well when they have profit margins lower than a restaurant?

[twosdai]

Scale. A restaurant can only serve 100's or maybe 1000's of guests in a single day.

Spotify has Millions of subscriptions. 2% at scale is significant.

Here is their recent Q3 earnings report: https://newsroom.spotify.com/2023-10-24/spotify-reports-thir...

Their revenue was 3.4 Billion Euros at 2% they can take away 68 Million dollars. Which is more than enough for the business to be viable.

[callalex]

For the same reason you buy nicer toilet paper for your home than the stuff you find at a truck stop: it’s not a significant portion of their expenses.

[htrp]

>This will hurt Google and may destroy Spotify.

How does this destroy Spotify?

[oliwarner]

They could be fined and then forced to pay full whack.

But I'm not sure they meet the threshold for anti-competative practice. You'd need to show some sort of paid exclusivity (eg a bribe so only Spotify could get a better rate).

30% for market access is a bigger net evil that anything Spotify might be doing IMO.

[vGPU]

They run very slim profit margins, regulators could fine them more than they could afford to pay.

[lotsofpulp]

They run negative profit margins:

https://www.macrotrends.net/stocks/charts/SPOT/spotify-techn...

https://www.macrotrends.net/stocks/charts/SPOT/spotify-techn...

[pests]

Why would Spotify be fined here? What wrong doing?