Spotify has 50 million people paying for its music. Why is it still unprofitable?

As an on-demand music buffet, Spotify must regularly pay to license its library of 30 million songs from the labels and artists who own them—which gets expensive fast, causing a staggering 80% of the company’s cash flow to go straight back out as copyright payments. Revenue from users isn’t keeping up. The service’s premium subscription tier ($9.99 a month for users in the US and roughly equivalent around the world) does draw in more money than its free, advertisement-supported tier—but paying subscribers only make up 30% of Spotify’s overall user base; the majority of people are still listening for free. – Amy X. Wang, Quartz http://ift.tt/2m5HcAa
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