Despite building the best-in-class product and getting everyone to use it, music streaming service Spotify does not have impressive economics as it has to pay the record labels for the rights to deliver music. However, the service is now introducing an upcoming feature that will allow users to create a personalized music station without having to pay the musicians.
Economic models in non-music audio are becoming important for Spotify, where investing in core talent and content creation is vital for its margins to improve. Unlike Spotify, Amazon has broader strategies to enhance the company's value, while Spotify relies heavily on its non-music audio for improved margins.
Google struggled for years with the question of what its consumer subscription business should be, as it did not have consumer credit cards across its platform despite a billion daily users. The challenge was in determining what business to pursue to have a subscription model with consumers.
The speaker discusses the missed opportunities for Disney Plus, which include having a merch store and app store within its platform and owning a music streaming service like Spotify.
Spotify's business model relies on the trust that if music does not become popular and people are not willing to pay for it, the company will not be profitable. Other companies have different business models where they can be profitable even without the music industry.
This podcast explores the evolution of business models in the digital era, from piracy and competing with free to the rise of subscription plans, and how user experience and performance play a crucial role in businesses today.