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Spotify doesn't make profit from music streaming, despite having over 400M monthly active users, because it pays two-thirds of all its revenue to the rights holders. (open.substack.com)

submitted 11 months ago by 4realz@lemmy.world to c/technology@lemmy.world

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[–] Mahlzeit@feddit.de 0 points 11 months ago

From the article:

However, the problem for Spotify is that the record labels anticipated this move and prevented Spotify from ever owning music content and competing with them.

They included terms in their licensing contracts with Spotify that forbid Spotify from owning content and streaming it exclusively on its platform.

These contracts make it extremely difficult for Spotify to own songs without violating the terms given by the record labels, which could result in expensive penalties and even legal actions against them.

Spotify is dominated by The Big Three and Merlin (an organization representing independent labels), who own over 75% of the streamed music, giving them too much power.

This was why when Spotify tried to license music directly from artists in 2018, bypassing the record labels, it was sued, forcing Spotify to stop within months.