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0:00
Hello.
My name is Mariusz Soltanifar.
I am a researcher in the area
of Corporate Entrepreneurship
and Marketing Lecturer at the Hanze
International Business School
in Groningen, the Netherlands.
Today, I'm going to talk about
music streaming services
and how royalties
paid out to artists
are prohibiting Spotify
from turning a profit.
Using Spotify as an example,
we are going to
analyze how Spotify
can increase revenues
from royalties,
while keeping artists
at the platform
as well as being able
to turn a profit.
0:35
Let's first have a
look at the overview
of what I've prepared.
The following case focuses
on Spotify and how
music streaming services pay
out royalties to artists,
as well as how Spotify
can turn a profit
but also keep artists
on their platform.
First, the nature of the
challenge is highlighted.
Second, the company
itself is presented.
Third, the explanation
of what has been done,
the action taken, is discussed.
Fourth, the outcome is revealed.
Lastly, the learning
is presented.
1:10
Let me highlight the
nature of the challenge
that Spotify faces first.
Spotify is the world's largest
music streaming platform.
However, it has struggled
to attain profitability.
In 2018, Spotify managed
to have earnings,
before interest, taxes,
depreciation and amortisation,
of more than minus $300 million.
This is an increase in losses
compared to previous years.
This shows how, over
the last few years,
the company has struggled
to attain profitability,
mainly due to the extensive
cost of music licensing.
The royalties that Spotify
has to pay to musicians
and artists account for
75% of its expenses.
Moreover, these agreements
that are in place
with artists are
not without issues.
For instance, multiple
artists have expressed that
they feel they are not
being compensated enough
for their intellectual property.
