Prof G Markets: Spotify’s First Year of Profitability + Is Google Losing its Edge?

Profit Milestones

Spotify has achieved a significant milestone by posting its first full year of profitability, with gross profits rising 40% year over year. The platform added a record 35 million monthly active users in the fourth quarter, marking a 5% increase from the previous quarter. Scott Galloway highlights the company's innovation and integration of video, comments, and polls as key drivers of this success 1. He believes Spotify could rival YouTube in the digital age, noting, "If there's one platform that can rival YouTube in this new digital age, I think it's Spotify, and we're starting to see it in the numbers here."

If there's one platform that can rival YouTube in this new digital age, I think it's Spotify, and we're starting to see it in the numbers here.

--- Scott Galloway

Despite price hikes, premium subscribers grew by 11% year over year, and the stock reached an all-time high of $620 per share 2.

   

Artist Compensation

The debate over Spotify's artist compensation continues, with Scott Galloway and Ed Mylett discussing the industry's dynamics. Scott argues that the issue of artists being underpaid is not new and has been a longstanding problem within the music industry 3. He states, "Historically, it's been the record labels that have screwed their artists," highlighting that Spotify's first profitable year suggests the company isn't solely to blame.

Historically, it's been the record labels that have screwed their artists.

--- Scott Galloway

Ed adds that the digitization of markets often leads to a winner-takes-most environment, where top artists like Taylor Swift dominate 4. They both agree that the business model inherently favors the top 1%, making it difficult for struggling artists to earn a livable wage.