From the most recent 10Q. Revenue was $125M ($105 Ads / $20 Subscriber). Expenses: $82M Content, $10M hosting, $7M Prod Dev., $40M Marketing/Sales, $14M All Other. Net Result: $28M loss.
I wonder how much of that marketing costs are from their own interstitial ads between songs? I would think the cost to them is $0, but I wouldn't be surprised if they valued it at market rates. Perhaps to keep the IRS happy.
> I wonder how much of that marketing costs are from their own interstitial ads between songs?
Zero.
Marketing and Sales is primarily the cost of selling advertisements, including all the required employees. Selling $100M worth of ads isn't easy, (unless you are google).
You can't do that with public financial statements. When preparing financial statements, there is a process called intracompany balancing, where you pull out any revenue/expenses that were generated within the reporting entity.
If that nonsense was allowed, then every company would show revenues in the billions. The finance department would pay the the HR department for HR services, the marketing department would buy millions with their own company, etc.
It is common for internal accounting books to record these intracompany expenses/revenues for record keeping. For instance a TV Show pays for ads on the same network, but before Disney reports profits publicly all of that accounting cruft must be removed.
Not allowed. Any related parties have to be disclosed and will be removed on consolidation of financial statements. Unless both parties are totally separate entities with no relation, we are moving into fraud territory.