Can Streaming Music Ever Turn A Profit?

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Can Streaming Music Ever Turn A Profit?

Yesterday, Spotify announced that it's at 10 million paying subscribers, up from 6 million a year ago.

If the subscribers stick around, that implies over $1.2 billion in sales from subscriptions alone. Throw in ad revenue, and it's probably much higher.

But, those sales may be for naught. Spotify's model may prevent it from turning a profit. Many analysts believe that Spotify can't make money. They believe that as listens increase, so do its paychecks to artists. Spotify says 70% of its gross revenue goes to artists, and it keeps 30%, which should be enough to be profitable eventually.

However, as you can see in this chart from Statista, neither Spotify, nor Pandora have turned profits yet. Spotify's 2013 numbers have yet to be reported, so this chart is incomplete. However, it gives you a nice snap shot of the state of streaming music right now. Read »

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