Source: Spotify.com
BLOG POST #3
The economic principle I’m exploring is “Institutions are the “rules of the game” that influence choices”
My research question to help me study the economic principle is “How do free music apps like Spotify make money?”
The article/video/etc published in Investopedia titled “How Does Spotify Make Money?” demonstrates this economic principle because it shows people flock to streaming services like Spotify for their music because it is a cheaper alternative to buying every song that you want to listen to at the price of having to listen to adds every now and then.
First, Global music piracy leads to 12.5 billion dollars lost annually and in the U.S. alone a loss of 71,060 jobs. Spotify helps to alleviate some of these losses due to piracy because if people are given a way to download their music for free legally then they have no reason to go out and illegally pirate songs. Without Spotify more money would be lost and more people in the music industry would be put out of the job.
Second, Spotify makes money by providing a free version of the app with advertising and then also a paid subscription premium version without ads. Spotify collects revenue from companies to play their adds on the free version and then also the money from all those that pay for premium. This means that Spotify is able to constantly bring in revenue from all their free users by subjecting them to adds, and at the same time able to bring in money from all those willing to pay a monthly subscription in order to be add free and gain a few other benefits.
Third, Many music producers dislike Spotify because record labels receive less than a penny a day when Spotify streams their music. This means that any producer that has their music on Spotify will end up losing a great deal of money from all those choosing to listen to music for free rather than choosing to pay for their music.
In my next blog post I will research: How can consumers be persuaded to buy their music rather than finding a free alternative?
My research question to help me study the economic principle is “How do free music apps like Spotify make money?”
The article/video/etc published in Investopedia titled “How Does Spotify Make Money?” demonstrates this economic principle because it shows people flock to streaming services like Spotify for their music because it is a cheaper alternative to buying every song that you want to listen to at the price of having to listen to adds every now and then.
First, Global music piracy leads to 12.5 billion dollars lost annually and in the U.S. alone a loss of 71,060 jobs. Spotify helps to alleviate some of these losses due to piracy because if people are given a way to download their music for free legally then they have no reason to go out and illegally pirate songs. Without Spotify more money would be lost and more people in the music industry would be put out of the job.
Second, Spotify makes money by providing a free version of the app with advertising and then also a paid subscription premium version without ads. Spotify collects revenue from companies to play their adds on the free version and then also the money from all those that pay for premium. This means that Spotify is able to constantly bring in revenue from all their free users by subjecting them to adds, and at the same time able to bring in money from all those willing to pay a monthly subscription in order to be add free and gain a few other benefits.
Third, Many music producers dislike Spotify because record labels receive less than a penny a day when Spotify streams their music. This means that any producer that has their music on Spotify will end up losing a great deal of money from all those choosing to listen to music for free rather than choosing to pay for their music.
In my next blog post I will research: How can consumers be persuaded to buy their music rather than finding a free alternative?
I believe it is kind of unfair for musicians and record labels when all the money is going to the Spotify company itself, not the artists themselves. I would suggest looking into the Tidal music app, I have heard many people say that artists get more money this way.
ReplyDeleteYour topic is very interesting to me because I personally use this app and I absolutely love using it. I enjoy reading about Spotify.
ReplyDeleteAlso something else to look into could be do artist pay Spotify to have their music on the app and also do they have to sign contracts with the company?
ReplyDelete