We’re only six weeks into the year, and here’s the bloodshed we’ve already seen.
Sports Illustrated got rid of all of its staff.
Time magazine eliminated 15% of its unionized editorial staff.
NBC News announced layoffs.
LA Times laid off 20% of its newsroom employees.
Chicago Tribune suffered the first employee strike in its 180-year history.
TikTok refused to make concessions to Universal Music, and the largest record label in the world is now gone from this fast-growing platform.
Pitchfork’s corporate owner Condé Nast announced that the entire magazine would be absorbed into GQ.
Business Insider got rid of 8% of its staff.
There’s even a rumor about a network canceling its nightly news.
Meanwhile Spotify gave a new $250 million contract to Joe Rogan. And I keep hearing stories like this and this and this about successes on emerging platforms.
Welcome to the new normal—and we are only a few weeks into the year.
-------
When Spotify first listed its shares on the stock exchange, I expressed skepticism about its business model—declaring that “streaming economics are broken.”
I did the math. The numbers told me that you simply can’t offer unlimited music for $9.99 per month. Somebody would get squeezed—probably the musicians (for a start).
And now?
I note that Spotify has sharply increased its subscription price and recently laid off 1,500 employees.
But the company released quarterly earnings this week—and it is still losing money!
Meanwhile the CEO continues to sell his shares—another $57.5 million in the last few days.
Let me put this into perspective: Spotify was founded in 2006, and has now been operating for almost 18 years. It has 236 million subscribers in 184 countries. But the business still isn’t profitable.
I expect that Spotify will find a way to make money, sooner or later. But the company has already squeezed subscribers and musicians. So who gets squeezed next?
by Ted Gioia, The Honest Broker | Read more:
Image: Value Line/Spotify Financial Report
