Spotify Is Not Making Any Money Despite Earning A Lot Of Money

It might seem odd that the world’s leading music streaming service is not getting any money, but this is actually the challenge that Spotify has to contend with right now. A vast majority of the revenue earned by the Swedish company goes to record labels, leaving morsels for the service to use. The firm has recently announced that it would go public, but if it doesn’t address its revenue troubles soon, this might not matter.

As USA Today reports, music streaming is not making companies as much money as a lot of people might assume. While music studios, artists, and publishers might regularly whine about not getting enough money from these platforms, the service providers themselves are only getting peanuts compared to the amount being given to the labels.

Along with the announcement of going public, Spotify also provided details on how the company’s earnings work with regards its profits and the royalties that it pays out to the giant music industry firms, and it’s clear that the streaming service is struggling. To make matters worse for Spotify, music labels are demanding even more money, which is putting it in a tighter spot than ever before.

The Swedish service provider also notes how its main competitors are also taking a huge piece of the pie, namely Apple and Google, the BBC reports. This part refers to the cut that the tech giants get for every in-app purchase made by users of Spotify. Since the two biggest app markets belong to those two rival businesses, there’s really not much that the music streaming service can do to change this.

This is on top of the threat that both Apple and Google pose to Spotify by offering their own streaming platforms. Apple Music is largely considered a clone of Spotify, which is quickly gaining a lot of users with the U.S. market.