Starting Point Proposal for a S2O Subscription Service

[fgblomqvist]

@LLK

Where did you get the 2000 streams number btw? I’d be curious to have that info, this seems like a very high threshold, and since we know they’re not turning a profit this would mean people consume more than 2000 songs on an average. And since the figures we have tell us that the average for “paid service music consumption” is closer to 1000 songs a month, this would imply that it also accounts for all free users in which case we can’t compare my proposition where everything is paid for and Spotify’s where how much people are willing to pay for advertising is the driving factor of profitability.

Sorry should have put a disclaimer that it was just a rough estimate of $0.005 per stream payout (got from Google) and then dividing $10 by that. Of course, like you say, they might have other revenue streams and expenses so it’s not just simply “breakeven at 2k streams”. Maybe they also pay less than $0.005, etc… But it should serve as a ballpark estimate of when their other revenue streams will need to cover their losses. Though, like you also mentioned, with all their free and family-plan users, the average pay/user is probably a lot lower than $10, maybe even $5 or less per month.

Now, they have tons of super expensive engineers/managers employed so while their subscription model might breakeven at x streams, the company as a whole would probably need that to be 0.5x streams, or maybe even less, to be able to cover for all the engineers/managers.

So with all that in mind, it’s not weird that they’re not profitable. However, I don’t see Resonate ever being profitable either, no matter the model, if they were to have anywhere near the kind of spending that Spotify does.

@LLK

if we can guarantee 1 penny per stream once we scale

The only way this would be possible afaik would be through having a higher subscription fee, closer to 15-20 a month.

@LLK

I’m still unclear how we do that by the way

Hmm yeah but not too odd perhaps, considering that one member fee of 10 covers 10.000 of those pennies (just as one example of why it may be possible).

@LLK

What’s better for listeners

This is definitely juicy stuff, 100% better (well, minus the lack of music-discovery features, but maybe eventually).

@LLK

I gave numbers and linked to studies about that in the original post.

Sorry you’re right, I remember now. Thanks for referencing those again.

@LLK

We have a subscription where basically the more you listen to something, the more the chances are you already paid for it. And the more you own things, the more of what you pay each month goes to support discovery. This is extremely positive in my view.

I like this argument. I dislike how really big artists probably, sometimes, make more than 1 euro per song from me simply because they get really good royalties and I also play some of their songs (like old classics) a lot.

[LLK]

@fgblomqvist

Maybe they also pay less than $0.005, etc…

The current estimate on price payouts per stream at Spotify is .0038$ ( https://www.unionofmusicians.org/un-report ) and it’s decreasing over time (it used to be .0054) because, to answer your other question :

@fgblomqvist

Though, like you also mentioned, with all their free and family-plan users, the average pay/user is probably a lot lower than $10, maybe even $5 or less per month.

Indeed, Spotify’s ARPU (avergae revenu per user) is decreasing every year, to the point it’s now at 4,29$

Spotify premium average revenue per user worldwide 2021 | Statista

So basically, with a 10€ subscription service, we would have more than twice the bandwith for payouts.

Ultimately I would still prefer something like 12€ but I don’t think our current catalogue really lets us do that.

[fgblomqvist]

Nice stats, sounds good.