October 11, 2009 by Matt Thomas
Daniel Elk, one of the men behind internet radio service, Spotify has drawn attention to the continuing difficulties of making money from online music by hitting out at the perception that popular online music companies should be making money immediately.
In a post on the Spotify blog, Elk claimed that,
“The notion of overnight success is very misleading and actually rather harmful to any hope for long term and sustainable growth in this industry… this is unfortunately something the music industry as a whole is particularly good at, expecting business models to be proven within months of inception.”
Justified as Elk’s ire probably is, the notion that Spotify should be making money is understandable. The company, launched only a year ago, has more than five million registered users and usage of the system continues to grow rapidly. In addition to this, the company has managed to raise more than 71 million Euros in investment and, importantly, has apparently managed to persuade many of the music companies, to who they owe royalty payments, to take a stake in the company instead of cash.
Even so, Spotify, it would appear, is still far from achieving its goal of profitability though Elk is, at least publically, unbowed. Making the point that iTunes itself experienced the same problems.
“The truth is that even the most successful digital business to date,iTunes, missed its revenue targets in its first year by 30%, and label executives were far from convinced that this was the future.”
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This is by far one of my favorite post you have done, i disagree on some points but most of the points you made i can respect. Keep it up!
Comment by KARL — July 25, 2010 @ 2:50 pm