Spotify

Spotify launched in two thousand and eight with a promise that made no financial sense: all the music in the world, for free. The catch was ads. The free tier generated two to four dollars per user per year — nowhere near enough to cover the licensing fees that consumed seventy percent of every dollar Spotify earned. Every free user cost the company money. That was the plan. The free tier was a funnel. Give people unlimited music with occasional interruptions and roughly forty five percent of them eventually pay ten dollars and ninety nine cents a month to make the ads disappear. By two thousand and twenty three, six hundred million people used Spotify. Two hundred and thirty six million of them paid. Revenue hit fourteen point three billion dollars. Of that ten dollars and ninety nine cents, Spotify kept about three dollars and thirty cents. The rest — roughly seven dollars and seventy cents — went straight to record labels, publishers, and artists.