Spotify Dominates Audio Streaming, but Where Are the Profits?

Spotify has a plum position in the audio-streaming business. It’s the leading platform, with some 600 million users. Its 30% market share is twice that of its next-largest competitor. Spotify is adding millions of new subscribers a month, and few of its users cancel. 

Most companies can only dream of that kind of industry dominance. Yet not even the leading audio-streaming company has consistently made money off audio streaming. 

While customers love the convenience of streaming, the question remains whether companies—in either audio or video—can translate that love to big profits. Spotify pays music labels nearly 70 cents of every dollar it earns from music streaming, its core business, similar to other services.

It has lost money in its $1 billion push into podcasting—a business that has turned out to be less lucrative than many first expected. An effort to stage concerts and sell tickets has struggled. And Spotify is two years late in rolling out high-fidelity lossless audio, a better-quality offering for audiophiles its major rivals have delivered.

The Stockholm company, with a market cap nearing $40 billion, competes with services run by deep-pocketed behemoths including